} 


HF 


m 

CM 


o 


•  mm      ii'        Til'       "^"^^^ 


J 


NATIONAL  ASSOCIATION 

OF  RAILWAY  AND  UTILITIES 

COMMISSIONERS 


Uniform  Classification 
of  Accounts  for 
Water  Utilities 


THE 

STATE 
LAW 


REPORTINO 
COMPANY 


Prepared  by 

Gominittee  on  Statistics  and  Accounts  of 
Public  Utilities  and  Recommended  for 
Adoption  by  State  Commissions  at  the 
Annual  Meeting  of  the  National  Association 
of  Railway  and  Utilities  Commissioners 
in  Atlanta,  October,  1921.  Revised  at  Con- 
vention,  Detroit,   Mich.,  November,  1922. 


•  •  •  •  •  • 


♦ 


> 


>      >  * 

5        »  1 


NATIONAL  ASSOCIATION 

OF  RAILWAY  AND  UTIUTIES 

COMMISSIONERS 


Uniform  Classification 

of  Accounts  for 

Water  Utilities 


REPORTINO 
COMPANY 


Prepared  by 

Committee  on  Statistics  and  Accounts  of 
Public  Utilities  and  Recommended  for 
Adoption  by  State  Commissions  at  the 
Annual  Meeting  of  the  National  Association 
of  Railway  and  Utilities  Commissioners 
in  Atlanta,  October,  1921 


•    •       • 


Published  by 
THE  STATE  LAW  REPORTING  COMPANY 

New  York 


Revision  of  1922 


Second  Edition 


COPYRIGHT,  1922 

BT  TKB 

NATIONAL  ASSOCIATION  OP  RAILWAY  AND  UTIUTIES  COMMISSIONERS 

All  Rights  Reserved 


0 


CONTENTS 


General  Instructions 1 

Balance  Sheet  Accounts 2 

General  Instructions  and  Definitions 4 

Text  Pertaining  to  Balance  Sheet  Accounts 9 

Fixed  Capital  Accounts  (List) 27 

General  Instructions  and  Definitions 28 

Text  Pertaining  to  Fixed  Capital  Accounts 34 

Income  Accounts  (List) 47 

General  Instructions  and  Definitions 49 

Text  Pertaining  to  Income  Accounts 52 

Profit  and  Loss  Accounts  (List) 59 

General  Instructions  and  Definitions 59 

Text  Pertaining  to  Profit  and  Loss  Accounts 60 

Operating  Revenue  Accounts  (List) \ 62 

General  Instructions  and  Definitions 62 

Text  Pertaining  to  Operating  Revenue  Accounts 64 

Operating  Expense  Accounts  (List) 67 

General  Instructions  and  Definitions 70 

Text  Pertaining  to  Operating  Expense  Accounts 74 


555  1  J)  7 


X 


»      » 

I  • 


t    »    >  J   ^  a 


UNIFORM  CLASSIFICATION  OF  ACCOUNTS 
FOR  WATER  UTILITIES 

GENERAL  INSTRUCTIONS 

1.  Accounts  to  be  Kept  by  Double  Entry  Method. 

All  the  accounts  (other  than  purely  statistical  accounts)  defined  in 
this  classification  must  be  kept  by  the  double  entry  method. 

2.  Account  Numbers  Not  a  Part  of  Title. 

The  numbers  prefixed  to  account  titles  in  this  classification  are. 
solely  for  convenience  of  reference  and  are  not  part  of  the  titles  or 
definitions.  n 

3.  Accounting  Period. 

It  is  recommended  that  'each  water  corporation  select  the  month 
as  its  accounting  period  and  that  it  make  its  bookkeeping  entries  on 
a  monthly  basis.  It  may,  however,  select  a  quarterly  or  other  basis 
if  that  will  better  meet  the  conditions  under  which  it  conducts  its 
business.  Each  corporation  will  be  required  to  close  its  books  at  the 
end  of  the  fiscal  year  for  which  it  makes  its  annual  report. 

4.  Records. 

Each  water  corporation  shall  so  keep  its  general  accounting  books 
and  all  other  books  and  records  which  support  in  any  way  the  entries 
to  such  accounting  books  that  it  can  furnish  at  any  time  full  informa- 
tion as  to  any  account  kept  by  it.  Moreover,  it  shall  support  each 
entry  to  each  account  with  such  detailed  information  as  will  enable 
a  ready  identification  and  verification  of  the  facts  recorded  therein. 

The  books  referred  to  herein  include  not  only  books  of  account  m  a 
hm.ited  technical  sense  but  all  other  records  such  as  minute  books, 
stock  books,  etc.,  which  will  be  useful  in  developing  the  history  of  any 
of  the  accounting  companv's  transactions. 


I 


BALANCE    SHEET   ACCOUNTS 


STANDARD  FORM  OF  BALANCE  SHEET 

ASSET  SIDE 


101.  Fixed  capital 

Current  Assets: 

111.  Cash 

112.  Notes  receivable 

113.  Accounts  receivable 

114.  Interest  and  dividends  receivable 

115.  Materials  and  supplies 

116.  Prepayments 

117.  Miscellaneous  current  assets 

Miscellaneous  Assets: 

121.  Investments  in  affiliated  companies 

122.  Miscellaneous  investments 

123.  Sinking  funds 

124.  Replacement  fund 

125.  Miscellaneous  special  funds 

126.  Special  deposits 

Suspense: 

131.  Unamortized  debt  discount  and  expense 

132.  Property  abandoned 

133.  Jobbing  accounts 

134.  Clearing  or  apportionment  accounts 

135.  Work  in  progress 

136.  Miscellaneous  suspense 

Adjustment  Accounts: 

141.  Discount  on  capital  stock 

142.  Reacquired  securities 

143.  Treasury  securities 

150.  Profit  and  loss — deficit 


BALANCE    SHEET   ACCOUNTS 


STANDARD  FORM  OF  BALANCE  SHEET 

LIABILITY  SIDE 


201.  Capital  stock 

202.  Premium  on  capital  stock 

211.  Long  term  debt 

212.  Receiver's  certificates 

Current  Liabilities: 

221.  Notes  payable 

222.  Accounts  payable 

223.  Consimiers'  deposits 

224.  Matured  interest  unpaid 

225.  Dividends  declared 

226.  Matiu-ed  long  term  debt  unpaid 

227.  Miscellaneous  current  liabilities 

Accrued  Liabilities: 

231.  Taxes  accrued 

232.  Interest  accrued 

233.  Miscellaneous  accrued  liabilities 

241.  Advances  from  affiliated  companies 

Reserves: 

251.  Retirement  reserve  (depreciation) 

252.  Casualty  and  insurance  reserve 

253.  Unamortized  premium  on  debt 

254.  Sinking  fund  reserves 

255.  Contributions  for  extensions 

256.  Contingency  reserve 

257.  Miscellaneous  reserves 

261.  Miscellaneous  unadjusted  credits 

270.  Profit  and  loss — surplus 


BALANCE    SHEET   ACCOUNTS 


BALANCE  SHEET  ACCOUNTS 
General  Instructions  and  Definitions 

1.  Balance  Sheet  Accounts  Defined. 

By  balance  sheet  accounts  are  meant  those  titles  under  which  the 
ledger  accounts  are  combined  and  summarized  to  show  the  assets, 
liabilities  and  surplus  or  deficit  of  an  enterprise  at  a  given  time.  Where 
the  title  and  definition  of  a  balance  sheet  account  clearly  indicate 
that  it  is  a  summary  of  other  accounts,  it  is  not  required  that  a  special 
ledger  account  shall  be  raised  under  such  title  to  include  the  balances 
from  the  accounts  usually  carried  on  the  ledger. 

2.  Form  of  Balance  Sheet. 

The  standard  form  of  balance  sheet  is  shown  on  pages  2  and  3. 
Certain  of  the  terms  there  used  are  defined,  for  the  sake  of  greater 
clearness,  in  the  following  paragraphs: 

3.  Current  Assets. 

Current  assets  are  those  assets  that  are  readily  converted  into 
money  or  capable  (in  the  case  of  materials  and  supplies)  of  being 
used  in  operation  or  construction. 

4.  Investments.  _ 

Investment  represents  the  relatively  permanent  employment  of 
property  for  the  purpose  of  directly  or  indirectly  producing  revenue. 
Investment  in  permanent  assets  devoted  to  the  undertakings  for  which 
the  accounting  company  is  primarily  organized  is  called  fixed  capital 
investment  or  simply  fixed  capital.  Property  in  the  form  of  assets 
necessary  to  the  conduct  of  the  accounting  company's  operations  of 
which  the  individual  items  are  subject  to  frequent  change  is  sometimes 
said  to  represent  an  investment  in  working  capital.  Investments  may 
also  be  of  property  segregated  in  special  funds;  of  property  devoted 
to  the  use  of  affiliated  corporations;  or  of  property  not  devoted  to  the 
undertakings  for  which  the  accounting  company  is  primarily  organized, 
as  more  specifically  defined  in  account  No.  122,  ** Miscellaneous  In- 
vestments," which  see.  Encumbered  investments  are  those  held  subject 
to  a  lien  or  other  encumbrance  of  some  character.  Unencumbered 
investments  are  those  held  free  of  all  encumbrances. 


BALANCE    SHEET   ACCOUNTS  5 

5.  Funds. 

Funds  are  assets,  usually  those  capable  of  ready  conversion  into 
cash,  set  aside  in  the  hands  of  trustees  or  otherwise  restricted  to 
specific  uses. 

6.  Suspense  Accounts. 

Suspense  accounts  are  accounts  in  which  may  be  carried  any  ex- 
penditure the  appropriate  disposition  of  v.hich  is  not  yet  determined, 
or  any  loss  which  may  properly  be  spread  over  a  period  of  time,  or 
any  other  debit  which  may  be  amortized  through  charges  made  to 
expense  or  other  income  accounts  at  intervals  over  a  period  of  time; 
credit  items,  the  final  disposition  of  which  is  not  yet  determined,  may 
also  be  carried  in  suspense  under  account  No.  261,  "Miscellaneous 
Unadjusted  Credits." 

7.  Adjustment  Accounts. 

Adjustment  accounts  are  accounts  in  which  may  be  carried  debits 
that  offset  certain  liabilities  but  which  it  is  not  desirable,  as  a  matter 
of  bookkeeping  convenience,  to  charge  against  the  liability  accounts 
concerned. 

8.  Current  Liabilities. 

Current  liabilities  are  those  which  are  definitely  determined  in 
amount  and  are  either  matured  at  the  date  of  the  balance  sheet  or 
become  due  within  a  year  from  date  or  upon  demand  of  the  creditor. 

9.  Accrued  Liabilities. 

Accrued  liabilities  are  those  nuu  yet  due,  but  which  are  to  become 
due  in  the  near  future  and  which  accrue  or  grow  from  day  to  day, 
such  as  unmatured  interest,  rents,  taxes,  etc.  Credits  to  accounts 
representing  accrued  liabilities  whose  amounts  are  not  definitely 
known,  as  in  the  case  of  many  taxes,  are  made  on  the  basis  of  esti- 
mates which  are  adjusted  when  the  proper  amounts  become  known. 

10.  Reserves. 

Reserves  are  credit  accounts  created  through  arbitrary  or  esti- 
mated charges  made  to  provide  wholly  or  in  part  for  matters  to  be 
later  determined. 

11.  Discount  and  Premium  on  Capital  Stock. 

Ledger  accounts  shall  be  provided  to  cover  the  discounts  and 
premiums  on  each  class  of  capital  stock  issued  or  assumed  by  the 
accounting  company.    The  total  of  the  net  debit  balances  remaning 


6  BALANCE  SHEET  ACCOUNTS 

in  these  several  accounts  shall  be  included  in  account  No.  141,  "Dis- 
count on  Capital  Stock,"  and  the  total  of  the  net  credit  balances  in 
account  No.  202,  "Premium  on  Capital  Stock." 

By  the  term  discount  is  meant  the  excess  of  the  par  value  of  stocks 
actually  issued  or  assumed  (and  accrued  dividends,  if  any,  expressed 
in  the  contract  of  sale)  over  the  actual  cash  value  of  the  consideration 
received  for  such  stocks.  By  the  term  premium  is  meant  the  excess 
of  the  actual  cash  value  of  the  consideration  received  for  stock  issued 
or  assumed  over  the  par  value  of  such  stock  (and  accrued  dividends, 
if  any.) 

Entries  in  these  accounts  representing  discounts  shall  be  carried 
therein  until  offset  (1)  by  premiums  realized  on  subsequent  sales  of 
the  same  class  of  stock,  (2)  by  assessments  levied  on  the  stockholders, 
(3)  by  appropriations  from  surplus  for  that  piupose,  or  (4)  by  charges 
to  Profit  and  Loss  upon  reacquirement  of  the  stock.  Entries  in  these 
accounts  representing  premiums  realized  shall  be  carried  therein  until 
offset  (1)  by  discount  suffered  on  sales  of  the  same  class  of  stock,  or 
(2)  by  credits  to  Profit  and  Loss  upon  reacquirement  of  the  stock.  In 
case  the  accounting  company  is  permitted  and  elects  to  distribute  all 
or  any  part  of  the  net  premium  on  its  capital  stock  to  its  stockholders, 
the  amount  thus  distributed  shall  be  charged  to  the  premium  account. 

For  the  purpose  of  this  classification  the  premiimi  realized  at  the 
sale  of, capital  stock  shall  not  be  considered  a  profit  and  loss  item  ex- 
cept upon  reacquirement  of  the  stock  sold. 

In  no  case  shall  discount  on  capital  stock  be  charged  to  or  included 
in  any  account  as  a  part  of  the  cost  of  acquiring  any  property,  tangible 
or  intangible,  or  as  a  part  of  the  cost  of  operation. 

When  stock  which  has  been  issued  or  assumed  by  the  accounting 
company  is  reacquired,  the  difference  between  the  price  paid  and  the 
par  value  of  the  stock  shall  be  charged  or  credited  to  Profit  and  Loss 
as  may  be  appropriate.  Concurrently  the  premium  or  discount  ac- 
count for  the  particular  issue  of  stock  reacquired  shall  be  adjusted 
through  Profit  and  Loss  to  the  extent  of  the  premium  or  discount 
applicable  to  the  shares  reacquired.  This  does  not  apply  to  the  pur- 
chase of  securities  solely  for  special  funds  in  which  the  accounting 
company  carries  at  cost  instead  of  par  value  securities  issued  or  as- 
sumed by  itself. 

In  case  the  premium  or  discount  realized  at  the  prior  sale  of  the 
stock  reacquired  has  been  included  in  an  asset  account  other  than  the 
premium  and  discount  account,  such  asset  account  shall  be  concur* 


BALANCE  SHEET  ACCOUNTS  7 

rently  adjusted  through  Profit  and  Loss  to  the  extent  of  the  premium 
or  discount  previously  included  therein  with  respect  to  the  shares 
reacquired. 

12.    Discount,  Expense  and  Premium  on  Long  Term  Debt. 

Ledger  accounts  shall  be  provided  to  cover  discounts,  expense  and 
premiums  at  the  sale  of  each  class  of  long  term  debt  (including  re- 
ceiver's certificates)  issued  or  assumed  by  the  accounting  company. 
The  total  of  the  net  debit  balances  remaining  in  these  several  accounts 
shall  be  included  in  account  No.  131,  "Unamortized  Debt  Discount 
and  Expense"  and  the  total  of  the  net  credit  balances  in  account 
No.  253,  "Unamortized  Premium  on  Debt." 

By  the  term  discount  is  meant  the  excess  of  the  par  value  of  the 
securities  issued  or  assumed  and  the  accrued  interest  thereon,  over  the 
actual  cash  value  of  the  consideration  received  for  such  securities.  By 
the  term  premium  is  meant  the  excess  of  the  actual  cash  value  of  the 
consideration  received  for  securities  issued  or  assumed  over  the  par 
value  of  such  securities  and  the  accrued  interest  thereon. 

By  the  term  expense  are  meant  all  expenses  in  connection  with  the 
issue  and  initial  sale  of  evidences  of  debt,  such  as  fees  for  drafting 
mortgages  and  trust  deeds;  fees  and  taxes  for  issuing  or  recording 
mortgages  and  trust  deeds;  cost  of  printing  bonds,  certificates  of  in- 
debtedness, and  other  commercial  paper  having  life  of  more  than  one 
year;  fees  paid  trustees  acting  under  mortgages  and  trust  deeds;  fees 
paid  for  legal  services  to  trustees  relative  to  mortgage  securities;  fees 
and  commissions  paid  underwriters  and  brokers  for  marketing  such 
evidences  of  debt;  and  other  like  expense. 

Each  month  (or  other  accounting  period)  there  shall  be  charged  to 
income  account  "Amortization  of  Debt  Discount  and  Expense"  a 
proportion  (based  upon  the  ratio  of  such  fiscal  period  to  the  remaining 
life  of  the  respective  securities)  of  each  of  the  debit  balances  in  these 
accounts,  and  correspondingly  there  shall  be  credited  to  income  ac- 
count "Amortization  of  Premium  on  Debt"  a  similar  proportion  of 
each  of  the  credit  balances  in  these  accounts. 

When  any  long  term  debt  which  has  been  actually  issued  to  bona 
fide  holders  for  value  is  reacquired  by  the  accounting  company,  a  pro- 
portion of  the  balance  remaining  in  the  accounts  covering  discount, 
expense,  and  premium  on  long  term  debt  of  the  class  of  security  re- 
acquired shall  be  credited  or  charged,  as  may  be  appropriate,  to 
Profit  and  Loss.    Such  proportion  shall  be  based  upon  the  ratio  of  the 


8  BALANCE  SHEET  ACCOUNTS 

par  value  of  the  security  reacquired  to  the  par  value  of  all  the  securi- 
ties of  the  same  class  actually  outstanding  immediately  before  such 
reacquirement.  This  does  not  apply  to  the  purchase  of  securities 
solely  for  special  funds  in  which  the  accounting  company  carries  at 
cost  instead  of  par  value  securities  issued  or  assumed  by  itself. 

In  case,  however,  the  premium  or  discount  realized  at  the  prior  sale 
of  the  securities  reacquired  has  been  included  (in  excess  of  the  propor- 
tion authorized  in  the  text  of  fixed  capital  account  No.  355,  "Interest 
during  Construction")  in  an  asset  account  other  than  the  premium 
account,  such  asset  account  shall  be  concurrently  adjusted  through 
Profit  and  Loss  to  the  extent  of  such  excess  of  the  premium  or  discount 
previously  included  therein  with  respect  to  the  securities  reacquired. 

Except  as  provided  in  account  No.  355,  "Interest  during  Construc- 
tion," no  discount  on  long  term  debt  shall  be  charged  to  or  included  in 
any  account  as  a  part  of  the  cost  of  acquiring  any  property,  tangible 
or  intangible,  or  as  a  part  of  the  cost  of  operation. 

13.    Contingent  Assets  and  Liabilities. 

Contingent  assets  and  liabilities  shall  not  be  included  in  the  body 
of  the  balance  sheet  statement.  Whenever  the  balance  sheet  is  stated, 
however,  contingent  assets  and  liabilities,  if  any,  should  be  shown  in 
detail  in  a  supplementary  statement.  Contingent  assets  represent 
possible  sources  of  value  contingent  upon  the  fulfilment  of  conditions 
regarded  as  uncertain.  Contingent  liabilities  include  items  which  may, 
under  certain  conditions,  become  obligations  of  the  company,  but  are 
neither  direct  nor  assumed,  obligations  at  the  date  of  the  balance 
sheet. 


BALANCE    SHEET  ACCOUNTS 


TEXT  PERTAINING  TO  BALANCE  SHEET 

ACCOUNTS 

101.     Fixed  Capital. 

This  account  shall  include  the  cost  of  property  having  an  expecta- 
tion of  life  in  service  of  more  than  one  year  which  is  devoted  to  the 
operations  conducted  by  the  accounting  company,  less  deductions  for 
property  abandoned,  sold,  or  otherwise  retired. 

Separate  subdivisions  shall  be  used  for  each  distinct  class  of  opera- 
tions conducted  by  the  accounting  company,  as,  for  example,  "Fixed 
Capital — water, ' '  "Fixed  Capital^electric. ' '  If,  however,  the  account- 
ing company  conducts  two  or  more  separate  and  distinct  classes  of 
operations,  as  in  the  case  of  a  company  having  both  a  water  and  an 
electric  departrpent,  expenditures  chargeable  to  such  fixed  capital  ac- 
counts as  "Land,"  "Organization,"  "General  Structures,"  "Engineering 
and  Superintendence,"  etc.,  which  are  not  assignable  to  a  particular 
depart  ment  or  kind  of  operations,  may  be  shown  in  a  subdmsion  having 
the  title  "Fixed  Capital — general,"  The  foregoing  shall  not  be  construed 
to  prohibit  the  apportionment  of  such  expenditures  between  depart- 
ments on  a  more  or  less  arbitrary  basis  provided  this  basis  is  clearly 
stated  in  the  accounting  company's  public  reports. 

111.  Cash. 

This  account  shall  include  all  money  coming  into  the  possession  of 
the  accounting  company  in  which  it  has  a  beneficial  interest.  This 
covers  coin  of  the  United  States,  United  States  treastu-y  notes,  gold 
and  silver  certificates  and  greenbacks,  and  bank  bills  payable  to  bearer 
on  demand;  also  all  banks  credits,  checks  and  drafts  receivable  sub- 
ject to  satisfaction  or  transfer  upon  demand  (whether  payable  to 
bearer  or  to  order.) 

112.  Notes  Receivable.  , 

This  account  shall  include  the  ledger  value  of  all  notes  and  bills 
receivable  which  are  the  property  of  the  accounting  company  and 
upon  which  solvent  concerns  or  individuals  are  liable.  This  covers 
demand  notes,  drafts,  etc.,  issued  by  others  than  banks,  and  time 
notes,  drafts,  etc.,  by  whomever  issued.  This  account  does  not  in- 
clude notes  coming  within  the  definition  of  "Investments  in  Affiliated 
Companies"  or  "Miscellaneous  Investments"  (for  which  see  page  12). 


10  BALANCE    SHEET  ACCOUNTS 

113.  Accounts  Receivable. 

This  account  shall  include  all  amounts  (other  than  deposits  in  banks) 
owing  to  the  accounting  company  upon  open  book  accounts  with  sol- 
vent concerns  and  individuals ;  also  the  ledger  value  of  all  accounts  and 
claims  upon  which  responsibility  is  acknowledged  by  solvent  concerns 
and  individuals  or  which  are  sufficiently  secured  to  be  considered  good 
and  of  all  judgments  against  such  concerns  where  the  judgment  is  not 
appealable  or  suspended  through  appeal.  This  account  does  not  in- 
clude negotiables. 

Note  A. — The  record  of  accoxints  receivable  shall  be  kept  in  such  manner  as  to 
permit  the  ready  segregation  of  the  three  groups,  consumers'  accoimts,  accounts 
with  affiliated  companies,  and  miscellaneous  accounts  receivable. 

Note  B. — It  is  suggested  that  when  practicable  consumers'  accounts  be  further 
classified  into  current  month  accoimts,  accounts  more  than  one  month  but  less 
than  one  year  old,  and  accounts  over  one  year  old. 

114.  Interest  and  Dividends  Receivable. 

This  account  shall  include  the  amount  of  interest  accrued  to  the 
date  of  the  balance  sheet  on  funded  and  unfunded  Securities,  loans, 
open  accounts,  mortgages  and  deposits  held  by  or  for  the  accounting 
company;  dividends  declared  on  stocks  similarly  held,  and  dividends 
accrued  on  stocks  when  contracts  require  that  the  dividend  be  paid 
at  stated  times. 

Note. — No  amount  representing  interest  or  dividends  receivable  shall  be  included 
in  this  account  imless  its  payment  is  reasonably  assured  by  past  experience  and 
anticipated  provision,  or  otherwise.  But  the  definition  of  this  accoimt  should  not 
be  construed  to  prevent  the  carrying  of  interest  and  dividends  receivable  in  a  sus- 
pense account  until  collection  has  actually  been  made,  even  though  the  debtor  be 
considered  to  be  solvent. 

115.  Materials  and  Supplies. 

This  account  shall  include  the  balances  representing  the  cost  (in- 
cluding transportation,  insurance,  and  inspection  charges,  customs 
duties,  etc.,  of  all  material  and  supplies  not  charged  out  of  the  account- 
ing company's  accounts,  regardless  of  whether  the  same  are  intended 
to  be  consumed  in  construction  or  in  operation,  or  later  to  be  sold. 
Trade  or  cash  discounts  allowed  in  connection  with  the  purchase  of  or 
payments  for  materials  and  supplies  shall  be  credited  to  the  particular 
bills  on  which  such  discounts  are  allowed,  or  to  clearing  account 
"Stores  Expense"  when  not  practicable  to  credit  the  particular  bills. 

The  cost  of  materials  and  supplies  includes  all  specifically  assign- 
able transportation  charges  incurred  in  obtaining  the  delivery  of  such 
materials  and  supplies  upon  the  premises  of  the  purchaser,  and  the 
cost  of  any  special  tests  made  thereon  prior  to  their  acceptance. 


BALANCE  SHEET  ACCOUNTS  11 

When  any  materials  and  supplies  the  cost  of  which  has  been  charged 
to  this  account  are  issued  for  use,  the  amount  at  which  they  stand 
charged  herein  should  be  credited  to  this  account  and  charged  to  the 
proper  construction,  operating  expense,  or  other  account. 

The  scrap  or  salvage  value  of  things  retired  from  the  service  shall 
be  charged  to  an  appropriate  sub-account  in  this  account  while  vsuch 
things  remain  the  property  of  the  accounting  company.  If  such  sal- 
vage value  is  not  known,  it  shall  be  estimated  and  the  estimated 
amount  adjusted  to  conform  to  the  fact  when  it  is  determined. 

Inventories  of  materials  and  supplies  shall  be  taken  at  least  annually 
and  any  shortages  or  overage  disclosed  by  such  inventories  shall  be 
credited  or  debited  to  this  account  and  concurrently  debited  or  credited 
to  operating  expenses,  fixed  capital  or  other  appropriate  accounts. 

Note  A. — It  is  not  required  that  the  transportation  and  other  elements  of  cost 
shall  be  assigned  with  a  greater  degree  of  accuracy  than  to  the  nearest  cent  per 
unit  of  material  or  supply.  Where  a  single  transportation  item  covers  a  multi- 
tude of  things,  the  portion  of  the  expense  not  assigned  to  specific  things  should 
be  charged  to  the  same  account  to  which  store  expenses  are  charged. 

Note  B. — If  an  appliance  sold  is  for  any  reason  returned  to  the  accounting  com- 
pany, it  should  be  charged  to  the  appropriate  sub-account  at  its  appraised  value. 
Cost  of  repairing  or  renovating  it  should  be  charged  to  the  same  sub-account.  Appro- 
priate adjustments  should  be  made  in  accoimts  credited  with  the  original  sale. 

116.     Prepayments. 

This  account  shall  include  the  debit  balances  described  under  the 
following  sub-heads: 

a.  Prepaid  Taxes.  The  excess  of  taxes  paid  over  the  amount 
properly  chargeable  to  current  income  or  other  similar  account,  as 
shown  by  a  debit  balance  in  the  liability  account  (See  account  No.  231, 
"Taxes  Accrued,"  page  22). 

b.  Prepaid  Rents.  The  amount  of  rents  paid  in  advance  of  the 
enjoyment  of  the  term.  As  the  term  is  consumed,  this  account  shall 
be  credited  at  regular  accounting  intervals  and  the  appropriate  rent 
account  debited  with  the  amount  applicable  to  the  period. 

c.  Prepaid  Insurance.  The  amount  of  premium  on  insurance 
policies  paid  in  advance  of  their  accrual.  As  such  premiums  accrue 
they  should  be  credited  at  regular  accounting  intervals  to  this  account 
and  charged  to  the  appropriate  operating  expense  or  other  account. 

d.  Miscellaneous  Prepayments.  Prepayments  made  for  any 
purpose  other  than  as  provided  for  in  the  three  preceding  heads. 


12  BALANCE  SHEET  ACCOUNTS 

Note — By  the  accrual  of  insurance,  rents,  etc.,  is  meant  their  accumulation 
when  considered  as  spread  uniformly  over  the  period  to  which  they  apply.  Thus, 
if  the  rent  fixed  by  contract  of  lease  for  a  certain  property  is  $600  for  a  calendar 
year,  this  accrued  at  the  rate  of  $50  each  month  (unless  it  is  desired  to  base  the 
accruals  on  days,  when  the  varying  lengths  of  the  months  would  require  to  be  con- 
sidered), regardless  of  the  actual  times  when  the  rent  matures;  $50  should  thus 
(if  the  rent  has  been  prepaid)  be  credited  each  month  to  the  sub-accotmt  "Prepaid 
Rents"  and  concurrently  charged  to  the  appropriate  account  in  the  "Income"  ac- 
count.   Similarly  in  the  case  of  other  prepayments. 

117.     Miscellaneous  Current  Assets. 

This  account  shall  include  the  cost  of  all  current  assets  which  are 
not  includible  under  any  of  the  foregoing  accounts.  (See  "Balance 
Sheet  Accounts — General  Instructions  and  Definitions,"  Section  3, 
page  4). 

121.  Investments  in  Affiliated  Companies. 

This  account  shall  include  the  ledger  value  of  the  accounting  com- 
pany's investment  in  securities  or  non-negotiable  notes  issued  or  as- 
sumed by  affiliated  companies ;  also  of  its  investment  advances  to  such 
companies.  Two  companies  are  affiliated  if  either  one  controls  the 
policy  of  the  other  or  if  both  are  subject  to  the  same  control.  By 
"Investment  advances"  are  meant  debit  balances  in  open  accounts 
with  affiliated  companies  not  subject  to  current  settlement  and  interest 
accrued  on  such  open  accounts  when  such  interest  is  not  subject  to 
current  settlement.    This  account  shall  be  sub-divided  as  follows: 

a.  Stocks. 

b.  Bonds. 

c.  Notes. 

d.  Advances. 

Note  A. — ^Accoimts  with  affiliated  companies  which  are  subject  to  current  settle- 
ment such  as  charges  for  materials  and  supplies  currently  furnished,  charges  for 
repairs  to  equipment,  etc.,  shall  be  classed  as  current  assets  or  current  liabilities  as 
may  be  appropriate. 

Note  B. — Securities  borrowed  by  the  accounting  company  and  pledged  should 
not  be  included  in  this  account. 

Note  C. — Securities  pledged  for  purposes  other  than  that  of  security  for  long 
or  short  term  debt  of  the  accoimtin?  company  should  be  included  in  account  No. 
123,  "Sinking  Funds;"  account  No.  124,  "Replacement  Fund;"  accoimt  No.  125, 
"Miscellaneous  Special  Ftmds;"  or  accoiont  No.  126,  "Special  Deposits"  as  may  be 
appropriate. 

122.  Miscellaneous  Investments. 

This  account  shall  include  the  balances  in  accounts  representing  mis- 
cellaneous investments  such  as  those  in  securities  of  other  non-affiliated 
corporations,  in  tangible  property  of  a  permanent  nature  not  coming 
within  the  definition  of  fixed  capital,  as,  for  example,  real  estate  leased 


BALANCE  SHEET  ACCOUNTS  13 

to  others  or  held  for  a  rise  in  value,  etc.,  provided  such  investments 
are  not  included  in  any  special  fund  account. 

The  accounting  company's  records  shall  be  kept  in  such  manner  as 
to  permit  the  ready  analysis  of  this  account  to  show  separately  in  the 
company's  annual  reports  full  particulars  concerning  its  investments 
of  any  given  class,  including  the  ledger  value  of  those  which  are  held 
subject  to  a  mortgage,  pledge,  or  other  lien. 

123.  Sinking  Funds. 

This  account  shall  include  the  amount  of  cash,  the  ledger  value  of 
securities  of  other  companies,  and  other  assets  which  are  held  by  trus- 
tees of  sinking  funds  for  the  purpose  of  redeeming  outstanding  obliga- 
tions, including  such  assets  so  held  by  the  accounting  company  when 
they  are  segregated  in  a  distinct  fund;  also  amounts  deposited  with 
such  trustees  on  account  of  mortgaged  property  sold,  when  the  pro- 
ceeds of  such  sale  are  to  be  held  for  the  redeeming  of  securities;  and 
the  cost  of  live  securities  issued  or  assumed  by  the  accounting  com- 
pany and  held  in  such  funds.  A  separate  account  shall  be  kept  for 
each  fund  and  the  title  of  each  fund  should  designate  the  obligation 
in  support  of  which  the  fund  is  created. 

• 

Note. — Should  the  constituents  of  a  sinking  fund  change  substantially  in  value, 
and  such  change  seem  likely  to  be  permanent,  it  may  be  reflected  by  vsuitable  entries 
in  this  accoimt  and  in  the  corresponding  reserve  account  or  in  "Profit  and  Loss" 
as  may  be  appropriate. 

124.  Replacement  Fund. 

If  the  accounting  company  desires,  or  is  required,  to  segregate  in  a 
special  fund  the  assets  or  any  part  of  the  assets  represented  by  the 
retirement  reserve,  the  ledger  value  of  such  assets  shall  be  included  on 
the  balance  sheet  in  this  account. 

125.  Miscellaneous  Special  Funds. 

This  account  shall  include  the  amount  of  cash  and  the  ledger  value 
of  securities  of  other  companies  and  other  assets  in  insurance,  em- 
ployees' pension,  savings,  relief,  hospital,  and  other  funds  which  have 
been  raised  and  specifically  set  aside  or  invested  for  purposes  not  pro- 
vided for  elsewhere;  also  thQ  cost  of  securities  issued  or  assumed  by 
the  accounting  company  and  held  in  such  funds.  A  separate  account 
shail  be  provided  for  each  fund.  • 

126.  Special  Deposits. 

This  account  shall  include  the  debit  balances  described  under  the 
following  sub-heads: 


14  BALANCE  SHEET  ACCOUNTS 

a.  Coupon  Special  Deposits.  All  moneys  and  bank  credits  spe- 
cially deposited  in  the  hands  of  fiscal  or  other  agents  of  th^s  accounting 
company  for  the  payment  of  interest  covipons  when  presented.  Such 
coupons  when  paid  from  such  deposits  shall  be  credited  to  this  account 
and  charged  to  the  appropriate  matured  interest  account.  Payments 
to  trustees  (or  other  agents  of  the  holders  of  bonds  or  other  securities) 
of  the  interest  accrued  thereon  which  operate  under  the  terms  of  the 
securities  (or  of  mortgages  supporting  such  securities)  as  a  release  of 
the  paying  corporation  from  further  liability  from  such  interest  shall 
not  be  charged  to  this  account  but  to  the  appropriate  "Interest  Ac- 
crued" account. 

b.  Dividend  Special  Deposits.  All  moneys  and  bank  credits 
specially  deposited  in  the  hands  of  fiscal  or  other  agents  of  the 
accounting  company  for  the  payment  of  dividends  upon  its  stocks. 
Such  dividends  when  paid  from  such  deposit  shall  be  credited  to  this 
account  and  charged  to  the  appropriate  dividend  account. 

c.  Miscellaneous  Special  Deposits.  All  moneys  and  bank 
credits  deposited  in  the  hands  of  fiscal  or  other  agents  of  the  account- 
ing company  for  other  special  purposes  than  the  payment  of  interest 
coupons  and  dividends.  Charges  to  this  account  shall  specify  the 
purpose  for  which  deposit  is  made.  When  such  purposes  are  satisfied, 
this  account  shall  be  credited  with  the  amount  specially  deposited  to 
provide  such  satisfaction. 

Note. — This  account  shall  not  include  any  assets  available  for  general  corporate 
purposes. 

131.  Unamortized  Debt  Discount  and  Expense. 

This  account  shall  include  the  total  of  the  net  debit  balances  repre- 
senting the  discount  and  expense  in  connection  with  the  issuance  of 
each  class  of  the  accounting  company's  long  term  debt  (See  "Balance 
Sheet  Accounts — General  Instructions  and  Definitions,"  Section  12, 
Page  7). 

132.  Property  Abandoned. 

This  account  is  intended  as  a  suspense. account  which  shall  include 
the  retirement  loss  (i.  e.,  the  original  cost,  estimated  if  not  known,  plus 
cost  of  dismantling,  less  salvage)  on  property  destroyed  or  abandoned 
because  of  replacement,  of  obsolescence,  of  an  extraordinary  casualty, 
or  for  any  other  reason,  when  such  loss  has  not  been  provided  for  in 
advance  through  a  reserve.  Charges  to  this  account  shall  be  made 
only  with  the  permission  of  the  regulatory  commission,  and  the  amount 


BALANCE    SHEET   ACCOUNTS  15 

SO  charged  shall  be  amortized  through  annual  or  more  frequent  charges 
over  a  definitely  determined  period  to. such  accounts  as  shall  be  proper. 
Application  to  the  commission  for  permission  to  use  this  account  shall 
give  full  particulars  concerning  the  property  abandoned  or  retired,  the 
reasons  for  its  retirement,  the  accounts  through  which  it  is  proposed 
to  amortize  the  retirement  loss,  and  the  future  period  over  which,  in 
the  judgment  of  the  company  making  the  application,  the  amount  of 
such  charge  should  be  distributed. 

133.  Jobbing  Accounts. 

This  account  shall  include  the  balances  in  accounts  with  customers 
or  others  for  jobbing  work  not  completed  at  the  date  as  of  which  the 
balance  sheet  is  stated.  Such  accounts,  when  work  is  completed  and 
charges  made,  shall  be  cleared  by  charges  to  accounts  receivable. 

134.  Clearing  or  Apportionment  Accounts. 

This  account  shall  include  the  balances  in  accounts  maintained  to 
carry  temporarily  the  cost  of  operating  such '  facilities  as  garages, 
stables,  storehouses,  etc.,  and  also  overhead  or  burden  costs  such  as  it 
is  desirable  shall  be  apportioned  over  the  construction  and  operating 
accounts  involved. 

The  charges  to  operating  accounts  and  the  credits  to  these  accounts 
should,  unless  there  is  some  good  reason  to  the  contrary,  be  so  dis- 
tributed that  the  costs  for  any  one  year  will  be  absorbed  by  the  trans- 
actions occurring  during  that  year. 

135.  Work  in  Progress. 

This  account  shall  include  the  total  of  the  balances  in  open  "work 
order"  or  "job  order"  accounts  for  work  in  progress,  or  in  suspense 
accounts  to  which  the  cost  of  construction  or  maintenance  work  is 
temporarily  charged  pending  its  final  distribution  to  the  appropriate 
fixed  capital  or  operating  expense  accounts. 

Note. — Charges  for  additions  to  fixed  capital  not  involving  replacements,  or 
for  improvements  which  necessitate  retirements  or  reconstruction  of  existing  prop- 
erty when  full  credits  have  been  made  in  advance  to  fixed  capital  accoimts  to  cover 
the  ledger  cost  of  property  retired,  may  be  carried  in  fix»i  capital  account  No.  359, 
"Unfinished  Construction,"  which  see. 

136.  Miscellaneous  Suspense. 

This  account  shall  include  all  debits  not  elsewhere  provided  for,  the 
proper  final  disposition  of  which  is  uncertain.  This  will  include  the 
cost  of  tentative  or  preliminary  surveys,  designs,  and  investigations 
made  for  determining  the  feasibility  of  projects  under  contemplation. 
If  the  project  is  thereafter  definitely  undertaken,  such  amount  shall 


16  BALANCE  SHEET  ACCOUNTS 

be  credited  to  this  account  and  charged  to  the  proper  work  order, 
fixed  capital,  or  other  account.  If  the  project  is  abandoned,  the  cost 
of  the  preliminary  investigation  shall  be  charged  to  the  appropriate 
operating  expense  or  other  account.  Whenever  the  proper  disposition 
of  any  matter  charged  to  this  account  is  determined,  it  shall  be  cred- 
ited to  this  account  and  charged  to  the  appropriate  account. 

141.  Discount  on  Capital  Stock. 

This  account  shall  include  the  total  of  the  net  debit  balances  repre- 
senting the  discount  on  capital  stock  issued  or  assumed  by  the  account- 
ing company  (see  "Balance  Sheet  Accounts — General  Instructions  and 
Definitions,"  Section  11,.  Page  5). 

142.  Reacquired  Securities. 

When  securities,  whether  debt  or  stocks,  have  been  actually  issued 
by  the  accounting  company  to  bona  fide  holders  for  value  (or  after 
such  issue  by  another  corporation  have  been  assumed  by  the  account- 
ing company)  and  after  such  issue  (or  assumption)  have  been  acquired 
by  the  accounting  company  under  circumstances  which  require  that 
they  shall  not  be  treated  as  paid  or  retired,  they  shall  be  charged  at 
face  value  to  this  account.  If  the  price  at  which  such  securities  have 
been  reacquired  is  greater  or  less  than  the  par  or  face  value,  the  dif- 
ference shall  be  adjusted  through  Profit  and  Loss  or  through  the  ap- 
propriate discount  or  premium  account. 

Note  A. — ^This  account  shall  not  include  securities  that  are  merely  guaranteed. 

Note  B. — This  account  shall  not  include  any  securities  held  in  sinking  and  other 
reserve  funds. 

143.  Treasury  Securities. 

This  account  shall  include  the  par  value  of  securities  which  have 
been  nominally  but  not  actually  issued  by  the  accounting  company. 
For  definition  of  the  term  "Nominal  issue"  see  note  under  account 
No.  201,  "Capital  Stock"  and  Note  B  under  account  No.  211,  "Long 
Term  Debt." 

150.    Pr<^t  and  Loss.— Deficit. 

Under  this  head  shall  be  shown  the  debit  balance,  if  any,  in  the 
Profit  and  Loss  account.  (See  "Profit  and  Loss  Account — General 
Instructions  and  Definitions."     Section  1,  Page  59). 

201.    Capital  Stock. 

This  account  shall  include  the  items  described  under  the  following 
sub-heads : 


BALANCE    SHEET   ACCOUNTS  17 

a.  Full  Paid  Stock.  This  dco vers  the  total  par  value  of  stocks  or 
receipts  issued  to  represent  permanent  full-paid  interests  in  the  ac- 
counting company,  or  interests  which,  if  terminable,  are  so  only  at  the 
option  of  the  company.  By  **Full  paid  interest"  is  meant  an  interest 
in  which  the  full  amount  of  the  subscription  has  been  paid  in. 

b.  Instalments  Paid  on  Stock  Subscriptions.  This  covers  the 
amount  of  instalments  paid  on  subscriptions  for  capital  stocks.  When 
the  full  amount  of  the  subscription  has  been  paid  and  certificates  of 
stock  are  issued  therefor  this  account  shall  be  cleared  and  the  par 
value  of  the  stock  so  issued  shall  be  credited  to  the  account  appro- 
priate for  such  stock. 

c.  Stock  Liability  for  Conversion.  This  covers  the  accounting 
company's  liability  under  agreements  to  exchange  its  capital  stock  for 
the  outstanding  securities  of  companies  whose  physical  property  has 
been  acquired  under  such  agreements,  but  whose  securities  have  not 
yet  been  surrendered  for  exchange. 

The  records  shall  be  so  kept  that  stocks  of  different  classes  may  be 
separately  shown.  The  following  is  the  most  important  classification 
of  stock : 

(a)  Common  stock:  Stock  which  has  no  preference  in  the  distri- 
bution of  dividends. 

(b)  Preferred  Stock:  bLucK  having  preference  in  the  distribution 
of  dividends. 

(c)  Debenture  Stock:  Stock  issued  under  a  contract  to  pay  a 
specified  rettirn  at  specified  intervals. 

Preferred  stock  may  be  further  classified  as  first  preferred,  second 
preferred,  etc.;  or  as  cumulative  or  non-cumulative \  or  as  participating 
or  non-participating.  First  preferred  stocks  are  those  which  have  the 
first  claim  upon  such  dividends  as  may  be  distributed;  a  claim  upon 
dividends  taking  precedence  over  the  claim  of  common  stock  but  in- 
ferior to  the  first  preferred  stock  may  be  represented  by  second  pre- 
ferred stock,  and  so  on.  Stock  is  cumulative  if  the  amount  by  which 
the  dividend  at  any  dividend  period  fails  to  reach  a  stipulated  divi- 
dend rate  is  carried  forward  to  continue  as  a  claim  upon  the  dividend 
fund  until  satisfied.  Stock  is  non-cumulative  if  such  amount  lapses. 
Stock  is  participating  if  it  is  not  limited  to  a  stipulated  rate  in  the 
amount  of  dividends  which  it  may  receive  but  is  entitled  to  partici- 
pate, in  accordance  with  the  terms  of  the  contract  under  which  it  is 
issued,  in  further  dividends.  It  is  non-participating  if  it  is  limited  to 
a  stipulated  rate. 


18  BALANCE    SHEET   ACCOUNTS 

Stocks  may  differ  also  with  respect,  to  voting  provisions  and  con- 
ditions under  which  they  may  be  retired.  A  separate  ledger  account 
should  be  maintained  for  each  class  of  stock  issued,  and  no  two  stocks 
shall  be  considered  of  the  same  class  unless  they  are  equal  in  their 
interest  or  dividend  rights,  their  voting  rights,  and  the  conditions  under 
which  they  may  be  retired.  The  characteristics  of  any  class  of  stocks 
in  these  three  regards  shall  be  designated  in  the  title  of  the  account 
raised  to  cover  such  stocks  and  shall  be  clearly  expressed  in  the  first 
entry  of  such  account.  To  the  account  for  any  class  of  stock  shall  be 
credited,  when  issued,  the  par  value  of  the  amount  of  stock  of  that 
class  issued.  If  such  issue  is  for  money,  that  fact  shall  be  stated;  and 
if  for  any  other  consideration  than  money,  the  person  to  whom  issued 
shall  be  designated  and  the  consideration  for  which  issued  shall  be  de- 
scribed with  sufficient  particularity  to  identify  it;  if  such  issue  is  to 
the  treasurer  or  other  agent  of  the  corporation  to  be  by  him  disposed 
of  for  the  benefit  of  the  corporation,  that  fact,  and  the  name  of  such 
agent,  shall  be  shown;  and  such  agent  shall,  in  his  account  of  the 
disposition  thereof,  show  the  like  details  concerning  the  consideration 
realized  thereon,  which  account,  when  accepted  by  the  corporation, 
shall  be  preserved  as  a  corporate  record.  If  the  fair  cash  value  of  the 
consideration  realized  upon  the  issue  of  any  amount  of  stock  is  greater 
than  the  par  value  of  such  stock  and  accrued  dividends,  if  any,  ex- 
pressed in  the  contract  of  issue,  the  excess  shall  be  credited  to  account 
No.  202,  "Premium  on  Capital  Stock,"  and  corresponding  reference 
thereto  shall  be  contained  in  the  entry  relating  to  such  stock  in  the 
stock  account. 

For  each  class  of  stock  the  records  shall  also  show  plainly  the  par 
value  of  (1)  certificates  issued  and  actually  outstanding,  being  those 
not  held  by  the  company,  its  agents  or  trustees,  or  subject  to  its  con- 
trol; and  (2)  certificates  pledged  and  unpledged  held  in  the  company's 
treasury,  by  its  agents  or  trustees,  or  otherwise  subject  to  its  control, 
including  both  those  acquired  after  actual  issue  and  those  nominally 
but  never  actually  issued. 

Note  A.— Capital  stock  is  considered  nominally  issued  when  certificates  are 
signed  and  sealed  and  placed  with  the  proper  officer  for  sale  and  delivery,  ot  pledged, 
or  otherwise  placed  in  some  special  fund  of  the  accounting  company.  It  is  consid- 
ered to  be  actually  issued  when  it  has  been  sold  to  a  bona  fide  purchaser  for  a  valu- 
able consideration,  and  such  purchaser  holds  it  free  from  all  control  by  the  account- 
ing company.  All  capital  stock  actually  issued  and  not  reacquired  by  or  for  the 
accounting  company  is  considered  to  be  actually  outstanding.  If  reacquired  by  or 
for  the  accoimting  company,  under  such  circumstances  as  require  it  to  be  held  alive 
and  not  canceled  or  retired,  it  is  considered  to  be  nominally  outstanding. 

Note  B. — ^When  stock  without  p>ar  value  is  issued  the  actual  money  value  of 
the  consideration  realized  from  the  issue  should  be  credited  to  the  account  repre- 
senting that  particular  class  of  stock. 


BALANCE   SHEET   ACCOUNTS  19 

202.    Premium  on  Capital  Stock. 

This  account  shall  include  the  excess  of  the  actual  money  value  (at 
the  time  of  issue  of  the  stock)  of  the  consideration  received  for  such 
issue  over  the  par  value  of  the  amount  of  stock  issued  and  accrued 
dividends,  if  any,  expressed  in  the  contract  of  issue.  If  the  stock  is 
issued  by  the  corporation  to  its  treasurer  or  other  agent,  the  excess 
of  the  actual  money  value  of  the  consideration  obtained  by  such  agent 
in  exchange  for  such  stock  over  the  par  value  and  accrued  dividends 
thereof  shall  be  considered  the  premium  realized.  A  separate  ledger 
account  shall  be  maintained  for  each  class  of  stock  as  distinguished 
according  to  the  text  of  account  No.  201  preceding.  Entries  in  these 
accounts  shall  be  carried  therein  until  offset  by  credits  to  Profit  and 
Loss  upon  reacquisition  of  the  stock  or  by  credits  t;p  ''Cash"  or  similar 
account  in  case  the  corporation  is  permitted  and  elects  to  distribute 
to  its  stockholders  all  or  any  part  of  the  premium  realized  on  its  stock. 

211.    Long  Term  Debt. 

This  account  shall  include  the  total  par  value  of  all  debt  except 
receiver's  certificates  and  advances  from  affiliated  companies  (for 
which  see  below)  which  by  the  terms  of  its  creation  does  not  mature 
until  more  than  one  year  after  date  of  creation.  This  covers  bonds, 
notes,  mortgage  certificates,  and  all  other  forms  of  acknowledging  in- 
debtedness. 

The  records  shall  be  so  kept  that  long  term  debt  of  different  classes 
may  be  separately  shown.  The  most  important  classification  is  that 
based  upon  the  nature  of  the  lien  or  security  as  follows : 

(a)  Mortgage  Bonds :  Bonds  secured  by  a  lien  on  physical  property 
and  not  includible  in  the  other  subdivisions  of  this  account. 

(b)  Collateral  Trust  Bonds:  Bonds  and  notes  having  a  date  of 
maturity  of  more  than  one  year  after  date  of  issue  secured  by  a  lien 
on  securities  or  other  commercial  paper;  also  stock  trust  certificates 
that  are  similar  in  character  to  collateral  trust  bonds. 

(c)  Income  Bonds:  Bonds  which  ^re  a  lien  on  the  accounting 
company's  revenue  alone,  or  bonds  which,  while  being  a  lien  on  its 
property  and  franchises,  can  claim  payment  of  interest  only  in  case, 
interest  is  earned. 

(d)  Equipment  Obligations:  Equipment  bonds,  equipment  notes, 
or  other  obligations  secured  by  lien  on  specific  equipment. 

(e)  Miscellaneous  Obligations:  All  long  term  obligations  not  pro- 
vided for  in  the  four  preceding  classes,  including  notes,  unsecured 
certificates  of  indebtedness,  debenture  bonds,  plain  bonds,  real  estate 


20  BALANCE  SHEET  ACCOUNTS 

mortgages  executed  or  assumed,  and  other  similar  obligations  maturing 
more  than  one  year  after  date  of  issue. 

(f )  Receipts  Outstanding  for  Long  Term  Debt :  Receipts  for  pay- 
ment on  account  of  long  term  debt  securities.  When  the  securities 
are  issued  for  amounts  so  paid,  the  face  value  shall  be  included  in  the 
account  covering  the  class  of  funded  debt  for  which  the  securities  are 
issued. 

Long  term  debt  may  differ  also  with  respect  to  rates  of  interest, 
interest  dates,  and  date  of  maturity.  Separate  ledger  accounts  shall 
be  maintained  for  each  class  of  long  term  debt,  and  no  two  amounts 
of  debt  not  agreeing  in  respect  of  all  four  of  the  characteristics  above 
named  shall  be  included  in  the  same  ledger  account,  except  that  part 
of  any  long  term  debt  issue  agreeing  in  other  characteristics  but  ma- 
turing serially  may  be  treated  as  of  the  same  class.  The  title  of  each 
ledger  account  for  long  term  debt  shall  express  the  four  characteristics 
above  stated,  that  is  to  say,  mortgage  or  other  lien  or  security,  rate 
of  interest,  dates  of  maturity  of  interest,  and  date  of  maturity  of 
principal:  as,  e.  g.,  "First  Mortgage  5  per  cent.  Q.  F.  10,  August  10, 
1928,"  which  means  a  debt  secured  by  the  company's  first  mortgage, 
bearing  interest  at  the  rate  of  5  per  cent,  per  annum,  interest  matur- 
ing quarterly  on  February  10,  May  10,  August  10,  and  November  10 
of  each  year,  principal  maturing  August  10,  1928. 

For  each  class  of  long  term  debt  the  records  shall  also  show  plainly 
(1)  the  par  value  of  certificates  or  other  evidences  of  debt  issued  and 
actually  outstanding,  being  those  not  held  by  the  company,  its  agents 
or  trustees,  or  subject  to  its  control;  and  (2)  the  par  value  of  certifi- 
cates or  other  evidences  of  debt  pledged  or  unpledged  held  in  the 
company's  treasury,  held  by  its  agents  or  trustees,  or  otherwise  sub- 
ject to  its  control;  including  both  those  reacquired  after  actual  issue 
and  those  nominally  but  neyer  actually  issued. 

Note  A. — Securities  maturing  one  year  or  less  from  date  of  issue  shall  be  in- 
cluded in  account  No.  221,  "Notes*  Payable."  Matured  long  term  debt  shall  be 
included  in  account  No.  226,  "Matured  Long  Term  Debt  Unpaid." 

Note  B. — Long  term  debt  securities  are  considered  to  be  nominally  issued  when 
Certified  by  trustees  and  placed  with  the  proper  officer  for  sale  and  delivery,  or 
pledged  or  otherwise  placed  in  some  special  fund  of  the  accounting  company.  They 
are  considered  to  be  actually  issued  when  they  have  been  sold  to  a  bona  fide  pur- 
chaser for  a  valuable  consideration  and  such  purchaser  holds  them  free  from  all 
control  by  the  accounting  company.  All  securities  actually  issued  and  not  re- 
acquired and  held  by  or  for  the  accounting  company  under  such  circumstances 
as  require  them  to  be  considered  as  held  alive  and  not  cancelled  or  retired  are  con- 
sidered to  be  actually  outstanding.  If  reacquired  by  or  for  the  accoimting  com- 
pany, under  such  circumstances  as  require  them  to  be  considered  as  held  ahve  and 
not  cancelled  or  retired,  they  are  considered  to  be  nominally  outstanding. 


BALANCE   SHEET  ACCOUNTS  21 

212.    Receiver's  Certificates. 

When  any  receiver,  acting  under  the  orders  of  a  competent  court,  is 
in  possession  of  the  property  of  a  corporation,  and  under  the  orders  of 
such  court  issues  certificates  of  indebtedness  chargeable  upon  such 
property,  the  par  value  of  such  certificates  shall  be  included  in  this 
account. 

Note. — Separate  sub-accounts  shall  be  maintained  for  receiver's  certificates 
which  mature  in  more  than  one  year  and  those  which  mature  in  one  year  or  less 
from  date  of  issue. 

221.  Notes  Payable. 

This  account  shall  include  the  balances  representing  outstanding 
obligations  in  the  form  of  notes,  drafts,  acceptances,  or  other  similar 
evidences  of  indebtedness  payable  on  demand  or  within  a  time  not 
exceeding  one  year  from  date  of  issue. 

Note. — Secured  notes  and  time  loans  payable  more  than  one  year  from  date 
of  issue  shall  be  included  in  account  No.  211,  "Long  Term  Debt." 

222.  Accounts  Payable. 

This  account  shall  include  the  amount  of  audited  vouchers  or  ac- 
counts and  audited  pay  rolls  unpaid  on  the  date  of  the  balance  sheet ; 
also  balances  representing  unclaimed  wages  and  outstanding  pay  and 
time  or  discharge  checks  issued  in  payment  of  wages,  open  accounts 
with  other  companies,  except  such  as  are  includible  under  account  No. 
241,  * 'Advances  From  Affiliated  Companies,"  and  similar  items. 

223.  Consumers'  Deposits. 

This  account  shall  include  the  amounts  deposited  with  the  account- 
ing company  by  consumers  as  security  for  the  payment  of  bills.  De- 
posits refunded  shall  be  charged  to  this  account  and  credited  to  "Cash" 
or  to  account  No.  125,  "Miscellaneous  Special  Funds,"  if  a  special 
fund  for  such  deposits  is  maintained.  Deposits  applicable  to  uncol- 
lectible or  worthless  bills  shall,  at  the  close  of  the  fiscal  year  (or  earlier 
at  the  option  of  the  accounting  company)  be  credited  to  the  account 
of  the  consumer  involved  and  debited  to  this  account. 

224.  Matured  Interest  Unpaid. 

This  account  s:hall  include  the  amount  of  matured  and  unpaid  inter- 
est on  debt  of  the  accounting  company  except  where  such  interest  is 
added  to  the  face  of  the  principal  as  is  the  usual  case  with  judgments 
and  sometimes  with  advances  from  affiliated  companies. 

225.  Dividends  Declared. 

This  account  shall  include  the  amount  of  any  dividends  which  have 


22  BALANCE  SHEET  ACCOUNTS 

been  declared,  but  not  paid.  Dividends  •shall  be  credited  to  this  ac- 
count as  of  the  day  upon  which  they  become  a  liability  of  the  account- 
ing company  (which  is  generally  the  date  upon  which  they  are  de- 
clared) and  when  paid  shall  be  charged  to  this  account  and  credited 
to  "Cash"  or  other  suitable  account. 

226.  Matured  LongTTerm  Debt  Unpaid. 

This  account  shall  include  the  amount  of  long  term  debt  matured 
and  unpaid  without  specific  agreement  for  extension  as  to  time  of  pay- 
ment, including  unpresented  bonds  drawn  for  redemption  through  the 
operation  of  sinldng  and  redemption  fund  agreements. 

Note. — Real  estate  mortgages  whose  nominal  maturity  has  been  reached  but 
which,  by  mutual  agreement  between  mortgagee  and  mortgagor,  are  continued 
indefinitely  as  obligations  of  the  accoimting  company  need  not  be  transferred  to 
this  account,  but  may  continue  to  be  carried  in  account  No.  211,  "Long  Term 
Debt." 

227.  Miscellaneous  Current  Liabilities. 

This  account  shall  include  the  balances  in  all  open  accounts  repre- 
senting current  liabilities  not  specifically  provided  for  in  the  foregoing 
accounts. 

231.    Taxes  Accrued. 

This  account  shall  include  the  amount  of  taxes  accrued  and  properly 
charged  against  income  or  other  accounts  in  excess  of  the  amoimt  of 
taxes  paid  as  shown  by  the  credit  balance  in  the  tax  liability  account. 

An  open  account  entitled  "Tax  Liability  Accotmt"  shall  be  raised, 
and  to  it  shall  be  credited  at  the  close  of  each  accotmting  period  taxes 
accrued  during  the  period,  corresponding  debits  being  made  to  the 
appropriate  accounts  for  tax  charges.  Such  credits  will  necessarily 
be  based  upon  estimate,  but  from  time  to  time  during  the  year  as  the 
actual  tax  levies  become  known,  the  amount  of  the  periodic  credits 
shall  be  adjusted  so  as  to  include  as  nearly  as  may  be  possible  in  each 
year  the  taxes  applicable  thereto.  When  any  tax  is  paid,  it  shall  be 
charged  to  the  "Tax  Liability  Account"  and  credited  to  "Cash"  or 
other  suitable  account.  A  debit  balance  in  the  "Tax  Liability  Ac- 
count" due  to  the  prepayment  of  taxes  applicable  to  the  period  sub- 
sequent to  the  date  of  the  balance  sheet  shall  be  shown  imder  account 
No.  116,  "Prepayments,"  while  a  credit  balance  shall  be  shown  tmder 
account  No.  231,  "Taxes  Accrued." 

Note. — In  its  annual  reports  the  accoimting  company  may  be  required  to  state 
separately  its  liability  for  taxes  over-due  and  tmpaid,  i.  e.,  such  taxes  as  have  not 
been  paid  at  the  date  specified  for  such  payment  or  after  the  expiration  of  such 
additional  period  as  may  be  allowed  by  the  tax-levying  authority  before  penalty 
for  non-payment  or  delayed  payment  becomes  effective.  Overdue  taxes  include 
those  unpaid  because  of  Htigation  or  dispute. 


BALANCE    SHEET   ACCOUNTS  23 

232.  Interest  Accrued. 

This  account  shall  include  the  amount  of  interest  on  all  indebted- 
ness of  the  accounting  company  except  where  such  interest  is  added 
to  the  face  of  the  principal  as  in  the  usual  case  with  judgments  and 
sometimes  with  advances  from  affiliated  companies,  accrued  to  the 
date  of  the  balance  sheet  but  not  payable  until  after  that  date.  When 
such  interest  is  paid,  it  shall  be  charged  to  this  account  and  credited 
to  "Cash"  or  other  suitable  account.  Separate  sub-accounts  shall  be 
maintained  for  each  item  of  indebtedness. 

When  interest  matures  without  being  paid,  it  shall  be  charged  to 
this  account  and  credited  to  account  No.  224,  "Matured  Interest  Un- 
paid." Payments  to  trustees  (or  other  agents)  of  the  holders  of  bonds 
or  other  securities  of  the  interest  accrued  thereon  which  operate  under 
the  terms  of  the  securities  (or  of  mortgages  supporting  such  securities) 
as  a  release  of  the  paying  company  from  fuither  liability  for  such 
interest  shall  be  considered  equivalent  to  payments  of  interest  made 
direct  to  bondholders  and  such  interest  shall  not  be  credited  to  "Ma- 
tured Interest  Unpaid." 

The  interest  accrued  upon  any  judgment  against  the  accounting 
company  shall  not  be  credited  to  this  account,  but  to  the  account  to 
which  such  judgment  stands  credited. 

233.  Miscellaneous  Accrued  Liabilities. 

This  account  shall  include  the  balances  in  all  accounts  representing 
accrued  liabilities  other  than  interest  or  taxes. 

241.    Advances  from  Affiliated  Companies. 

This  account  shall  include  the  par  value  of  non-negotiable  notes  due 
to  affiliated  companies,  credit  balances  in  open  accounts  with  such 
companies  other  than  credit  balances  in  credit  accounts  classable  as 
current  liabilities,  and  interest  accrued  on  notes  and  open  accounts 
included  in  this  account  when  such  interest  is  not  subject  to  current 
settlement.  Two  companies  are  affiliated  if  either  one  controls  the 
policy  of  the  other,  or  if  both  are  subject  to  the  same  control. 

This  account  shall  be  sub-divided  as  follows  : 

a.  Notes,  including  both  time  and  demand  notes ; 

b.  Open  accounts  not  subject  to  current  settlement ; 

c.  Interest  accrued  on  amounts  included  in  this  account  when  not 
subject  to  current  settlement. 

Accounts  with  affiliated  companies  which  are  subject  to  current 
settlement,  such  as  charges  for  materials  and  supplies  currently  fur- 


24  BALANCE    SHEET   ACCOUNTS 

nished,  charges  for  repairs  to  equipment,  etc.,  shall  be  classed  as 
current  assets  or  current  liabilities  as  may  be  appropriate.  Negotiable 
notes  due  to  affiliated  companies  shall  not  be  included  in  this  account 
but  in  account  No.  221,  "Notes  Payable." 

251.  Retirement  Reserve. 

To  this  account  shall  be  credited  such  amounts  as  are  charged  to  the 
operating  expense  account  "Retirement  Expense"  to  cover  the  retire- 
ment loss  represented  by  the  excess  of  the  original  cost,  plus  cost  of 
dismantling,  over  the  salvage  value  of  fixed  capital  retired  from 
service;  to  this  account  shall  also  be  credited  such  amounts  as  may  be 
appropriated  from  surplus  for  a  similar  purpose.  When  any  fixed 
capital  is  retired  from  service,  the  original  cost  thereof  (estimated  if 
not  known,  and  where  estimated,  the  facts  on  which  the  estimate  is 
based  should  be  stated  in  the  entry)  should  be  credited  to  the  proper 
fixed  capital  account  and  charged,  plus  the  cost  of  retirement,  less 
salvage,  to  this  account.  If  the  credit  balance  in  this  account  is  in- 
sufficient to  cover  the  retirement  loss,  the  excess  over  the  balance 
contained  in  the  reserve  shall  (with  the  consent  of  the  regulatory 
commission)  be  charged  to  account  No.  132,  "Property  Abandoned," 
which  see,  or  other  appropriate  account. 

The  losses  which  this  account  is  intended  to  cover  are  those  incident 
to  important  retirements  of  buildings,  of  large  sections  of  continuous 
structures  like  water  mains,  or  of  definitely  identifiable  units  of  plant 
or  equipment,  and  the  object  of  the  account  is  that  the  burden  of  such 
losses  may  be  as  nearly  as  is  practicable  equalized  from  year  to  year. 

Note  A. — When  property  is  retired  whose  ledger  value  has  been  reduced  below 
original  cost,  only  the  remaining  ledger  value  shall  be  wntten  ofif  as  retirement 
loss. 

Note  B. — When  any  property  is  retired  whose  ledger  value  is  greater  than  the 
known  or  estimated  cost,  such  excess  shall  be  charged  to  Pn^fit  and  Loss. 

Note  C. — If  any  property  is  sold  for  more  than  its  original  cost,  the  excess  of 
its  selling  price  over  the  cost  of  the  property  plus  the  cost  of  dismantling  and  sell- 
ing, shall  be  credited  to  this  account. 

Note  D. — If  the  accounting  Company  has,  previous  to  the  effective  date  of  this 
uniform  classification  of  accounts,  maintained  a  reserve  under  some  other  title 
such  as  "Depreciation  Reserve"  for  the  purpose  of  equalizing  retirement  losses, 
the  balance  in  such  reserve,  as  at  the  effective  date  of  this  classification,  shall  be 
transferred  to  this  account. 

V 

252.  Casualty  and  Insurance  Reserve. 

When  any  admitted  liability  arises  because  of  loss  or  damage  to 
the  property  of  others,  or  of  injuries  to  employees  or  other  persons, 
the  amount  of  liability  may  (if  not  previously  provided  for  by  insur- 
ance or  self -insurance),  be  charged  to  the  appropriate  operating  ex- 
pense or  other  accounts  and  credited  to  this  account  against  which 


BALANCE    SHEET  ACCOUNTS  25 

(in  such  case)  the  actual  cost  of  satisfaction  of  the  liability  shall  be 
charged  when  the  matter  is  determined.  If  the  extent  of  the  liability 
can  not  be  ascertained  promptly  after  the  liability  arises,  it  may  be 
estimated  as  accurately  as  practicable  for  the  purpose  of  determining 
the  immediate  charge  to  the  expense  or  other  appropriate  account,  in 
which  case  the  matter  shall  be  adjusted  when  the  extent  of  the  lia- 
bility is  definitely  ascertained.  If  the  loss  is  of  such  character  that  it 
is  in  whole  or  in  part  indemnifiable  under  any  contract  of  insurance 
carried  by  the  accounting  company,  the  indemnifiable  portion  of  the 
loss  shall  be  charged  to  the  insurer  and  credited  to  "Casualties  and 
Insurance  Reserve."  This  account  shall  also  include  the  amounts 
charged  to  the  operating  expense  account  "Insurance"  to  cover  self- 
carried  risks. 

253.  Unamortized  Premium  on  Debt. 

When  long  term  debt  securities  or  other  evidences  of  indebtedness 
are  disposed  of  for  a  consideration  whose  cash  value  (exclusive  of 
accrued  interest)  is  greater  than  the  par  value  of  such  securities  or 
other  evidences  of  indebtedness,  the  excess  of  such  cash  value  of  the 
consideration  received  over  the  par  value  of  the  securities  or  other 
evidences  pf  indebtedness  shall  be  credited  to  this  account.  At  regular 
accounting  intervals  thereafter  a  proper  portion  of  such  premium, 
based  upon  the  life  of  the  security  or  other  evidence  of  indebtedness 
to  maturity,  shall  be  charged  to  this  account  and  credited  to  account 
No.  434,  "Amortization  of  Premium  on  Debt,"  in  the  income  account. 

254.  Sinking  Fund  Reserves. 

This  account  shall  include  the  net  balances  in  accounts  to  which  are 
credited,  in  accordance  with  the  requirement  of  mortgages  and  other 
contracts,  or  by  action  of  the  company's  directors,  definite  appropria- 
tions of  income  and  surplus  whether  held  in  general  funds  or  specifi- 
cally set  aside  in  the  hands  of  trustees,  for  the  purpose  of  retiring  or 
redeeming  bonds  or  other  obligations  of  the  accounting  company.  It 
shall  also  include  such  accretions  from  the  investment  of  funds  specifi- 
cally set  aside  for  the  above  described  purpose  as  are  required  to  be 
added  to  the  reserve. 

When  the  debt  which  the  sinking  fund  is  created  to  redeem  matures 
and  the  fund  has  accomplished  its  purpose,  the  balance  in  the  reserve 
shall  be  charged  to  this  account  and  credited  to  Profit  and  Loss.  If 
the  mortgage  or  other  obligation  permits,  the  par  value  of  bonds  or 
other  evidences  of  indebtedness  issued  or  assumed  by  the  accounting 
company  which  are  reacquired  through  the  operations  of  a  sinking 


26  BALANCE  SHEET  ACCOUNTS 

fund  may  be  charged  to  this  account  and  credited  to  Profit  and  Loss 
when  and  as  such  bonds  or  other  evidences  of  indebtedness  are  acquired. 

255.  Contributions  for  Extensions. 

To  this  account  shall  be  credited  contributions  in  money  or  property 
made  to  the  accounting  company  for  the  purpose  of  assuming  the 
burden  or  any  part  of  the  burden  represented  by  the  investment  neces- 
sary for  the  establishment  or  extension  of  services  rendered  by  the 
company.  This  covers  such  items  as  contributions  toward  the  cost  of 
line  extensions  in  sparsely  settled  territory  made  by  consumers,  either 
voluntarily  or  when  reasonably  required  by  the  company  as  a  condi- 
tion of  giving  the  desired  service,  and  the  cost  of  services  to  which 
the  company  has  title,  in  so  far  as  such  cost  is  borne  by  the  consumer; 
it  also  covers  grants  from  municipal  or  other  governmental  bodies  or 
contributions  from  chambers  of  commerce  and  similar  organizations 
made  with  the  object  of  establishing  a  new  service  in  the  community 

by  assuming  part  of  the  investment  cost  of  the  enterprise. 

Note. — This  does  not  include  advances  for  the  construction  ot  extensions  which 
are  ultimately  to  be  repaid  wholly  or  in  part,  to  the  consumer.  Such  advances 
should  be  credited,  to  Account  No.  261,  "Miscellaneous  Unadjusted  Credits^" 

When  final  determination  has  been  made  as  to  the  amount  of  the  advance  to  be 
returned  to  the  consumer,  the  balance,  if  any,  shall  be  credited  to  this  account. 

256.  Contingency  Reserve. 

This  account  shall  include  such  amounts  as  the  accounting  com- 
pany may  set  aside  to  provide  against  unforeseen  contingencies. 

257.  Miscellaneous  Reserves. 

This  account  shall  include  the  balances  in  all  reserves  other  than 
those  provided  for  in  the  six  preceding  accounts.  (A  description  of 
each  such  reserve  giving  the  purpose  for  which  it  is  created  and  a 
summary  of  debits  and  credits  thereto  during  the  year  may  be  re- 
quired in  annual  reports  to  the  regulatory  commission) . 

Note. — If  the  accotmting  company  maintains  operating  reserves  for  the  pur- 
pose of  equalizing  expenses  from  month  "to  month,  such  reserves  shall  be  cleared 
annually  imless  there  remains  a  credit  balance  due  to  the  non-completion  of  main- 
tenance work  because  of  adverse  labor  conditions,  non-receipt  of  material,  or  other 
similar  reasons,  in  which  case  such  part  of  the  balance  as  is  applicable  to  unfinished 
work  may  be  carried  over  to  the  following  year.  Under  no  circumstances  shall  a 
debit  balance  be  carried  over  the  year. 

261.     Miscellaneous  Unadjusted  Credits. 

This  account  shall  include  the  amount  of  credit  balances  in  suspense 
accounts  that  can  not  be  entirely  cleared  and  disposed  of  until  addi- 
tional information  is  received. 

270.    Profit  and  Loss— Surplus. 

Under  this  head  shall  be  shown  the  credit  balance,  if  any,  in  the 
Profit  and  Loss  account.  (See  "Profit  and  Loss  Account — General 
Instructions  and  Definitions,"  Section  1,  Page  59). 


FIXED    CAPITAL   ACCOUNTS  27 


FIXED  CAPITAL  ACCOUNTS 

301.  Organization 

302.  Franchises 

303.  Miscellaneous  intangible  capital 

311.  Land 

(a)  Source  of  supply  land  and  water  rights 

(b)  Pumping  station  land 

(c)  Purification  land 

(d)  Storage  land 

(e)  Transmission  and  distribution  land  and  rights  of  way 

(e-1)     Transmission  land  and  rights  of  way 
(e-2)     Distribution  land  and  rights  of  way 

(f)  General  office  land 

(g)  Miscellaneous  land  devoted  to  water  operation 

(g-1)  Stores  department  land 

(g-2)  General  shops  land 

(g-3)  Garage  land 

312.  Structures 

(a)  Source  of  water  supply  structures 

(b)  Pumping  station  buildings  and  fixtures 

(c)  Purification  buildings  and  fixtures 

(d)  Reservoirs  and  stand  pipes 

(e)  Distribution  structures 

(f )  General  office  buildings  and  fixtures 

(g)  Miscellaneous  structures  devoted  to  water  operations 

(g-1)     Store  department  structures 
(g-2)    General  shop  structures 
(g-3)    Garage  structures,  etc. 

313.  Boiler  plant  equipment 

314.  Steam  power  pumping  equipment 

315.  Electric  power  pumping  equipment 

316.  Gas  or  oil  power  pumping  equipment 

317.  Hydraulic  power  pumping  equipment 

318.  Miscellaneous  pumping  equipment 

319.  Purification  system 

320.  Transmission  mains  or  canals 

321.  Distribution  mains  or  canals 

322.  Services 

323.  Consumers'  meters  and  measuring  devices 

324.  Consumers'  meters  and  measuring  device  installation 

325.  Hydrants 

326.  Fire  cisterns,  basins,  fountains  and  troughs 

327.  General  equipment 

(a)  Office  equipment 

(b)  Shop  equipment 

(c)  Store  equipment 

(d)  Transportation  equipment 


28  FIXED    CAPITAL  ACCOUNTS 

(e)  Telephone,  telegraph  and  wireless  system 

(f )  General  laboratory  equipment 

(g)  Miscellaneous  equipment 
328.     Miscellaneous  tangible  capital 

Overhead  Cost  and  Other  Undistributed  Items: 

351.  Engineering  and  superintendence 

352.  Law  expendittu'es  during  construction 

353.  Injuries  and  damages  during  construction 

354.  Taxes  during  construction 

355.  Interest  during  construction 

356.  Miscellaneous  construction  expenditures 

357.  .  Fixed  capital  not  classified  by  prescribed  accounts 

358.  Cost  of  plant  and  equipment  purchased 

359.  CTnfinished  construction 

General  Instructions  and  Definitions 

1.  Fixed  Capital  Defined. 

By  the  fixed  capital  of  a  corporation  is  meant  the  property,  both 
tangible  and  intangible,  which  is  devoted  to  the  accomplishment  of 
the  principal  purposes  of  its  business  and  which  has  an  expectation 
of  life  in  service  of  more  than  one  year  from  date  of  installation  in 
service. 

2.  Tangible  and  Intangible  Capital  and  Overhead  Costs. 

Tangible  capital  covers  all  physical  property  classed  as  fixed  capital. 
Charges  to  specific  accounts  for  tangible  property  cover  direct  labor 
and  material  costs  up  to  and  including  the  time  of  the  foreman  super- 
vising the  job;  also  such  overhead  expenditures  for  engineering,  taxes 
during  construction,  etc.,  as  can  be  allocated  to  definite  items  of  prop- 
erty. Charges  to  overhead  cost  accounts  should  cover  only  expendi- 
tures of  this  nature  which  pertain  to  the  enterprise  as  a  whole  and 
cannot  be  allocated  to  definite  items  of  property.  Intangible  capital 
covers  organization  expenditures,  and  rights,  privileges,  and  other 
property  not  physical,  such  as  franchises  or  patent  rights. 

Sp  far  as  possible  overhead  costs  should  be  assigned  or  apportioned 
to  particular  jobs  or  items  to  the  end  that  each  item  shall  bear  its 
proper  share  of  such  cost,  and  that  the  entire  cost  of  the  item,  both 
direct  and  overhead,  shall  be  deducted  from  the  fixed  capital  accounts 
at  the  time  of  its  retirement.  Certain  overhead  costs,  however,  which 
clearly  pertain  to  the  entire  enterprise,  such  as  in  some  cases  engineer- 
ing, interest,  etc.,  should  not  be  apportioned,  but  retained  in  the 
appropriate  fixed  capital  accounts  as  part  of  the  investment  cost  so 
long  as  the  enterprise  continues  under  the  form  in  which  it  started. 


FIXED    CAPITAL   ACCOUNTS  29 

These  instructions  should  not  be  interpreted  as  permitting  the  addi- 
tion to  fixed  capital  accounts  of  arbitrary  percentages  to  cover  as- 
sumed overhead  costs,  but  only  as  requiring  the  assignment  or  appor- 
tionment to  particular  accounts  for  tangible  property  of  actual  and 
necessary  overhead  expenditures. 

3.  Fixed  Capital  to  be  Entered  and  Retained  on  Books  at  Cost. 

All  charges  to  fixed  capital  accounts  shall  be  at  the  actual  cost  of 
the  property  acquired,  at  the  time  of  its  acquisition.  A  bona  fide 
contract  or  agreement  of  purchase  and  sale  between  entirely  separate 
parties  shall  be  prima  facie  evidence  of  actual  cost.  Each  item  of 
property  shall  be  carried  in  the  fixed  capital  accounts  at  no  more, 
and  no  less,  than  its  actual  cost  unless,  or  until,  such  property  is 
abandoned,  replaced,  reconstructed,  or  converted,  when  the  account- 
ing shall  be  as  hereinafter  set  forth.  The  foregoing  shall  not,  how- 
ever, be  interpreted  to  forbid  the  inclusion  in  account  No.  357  "Fixed 
Capital  Not  Classified  by  Prescribed  Accounts"  of  undisturbed  book 
values  which  have  been  carried  prior  to  the  effective  date  of  a  pre- 
scribed uniform  system  of  accounts,  and  which  may  or  may  not  repre- 
sent the  actual  cost  of  property  in  service;  but  the  inclusion  of  such 
undisturbed  book  values  in  fixed  capital  accounts  shall  be  without 
prejudice  to  any  future  determination  of  the  actual  cost  of  the  prop- 
erty. The  term  "cost"  includes  not  only  the  cost  of  labor,  material, 
and  suppHes  directly  employed  or  consumed  in  the  construction  and 
installation  of  fixed  capital,  but  also  the  cost  of  preliminary  plans  and 
surveys  and  such  portion  of  the  expenses  for  engineering  and  plant 
supervision  and  of  general  expenses  as  may  be  chargeable  to  the  fixed 
capital  accounts  under  an  equitable  plan  for  apportionment  of  such 
expenses. 

4.  First  Entries  Must  Enable  Identification. 

Every  debit  or  credit  to  a  fixed  capital  or  other  investment  account 
must  be  made  in  such  wise  as  to  be  readily  identified  with  the  par- 
ticular item  of  property  to  which  it  relates.  For  each  item  (or  project) 
of  fixed  capital  or  other  investment  the  records  shall  show  the  date  of 
the  entry,  the  date  of  acquisition  or  installation,  the  date  when  placed 
in  service,  the  actual  money  cost,  and  the  description  thereof  with 
such  particularity  as  to  make  possible  the  location  and  identification 
thereof  (including  in  case  the  item  is  movable,  the  name  of  the  manu- 
facturer and  the  identifying  mark  or  number,  if  any,  imprinted  there- 
on, and  such  other  particulars  as  may  be  necessary  for  identificatior) 
Where  two  or  more  items  are  acquired  under  a  single  undivided  cou- 


30  FIXED    CAPITAL   ACCOUNTS 

tract,  the  entry  in  respect  of  each  shall  refer  to  the  others  and  shall 

state  the  entire  consideration,  and  shall  also  state  the  portion  thereof 

fairly  applicable  to  the  particular  item  covered  by  the  entry.    When 

any  item  of  capital  is  withdrawn  from  service,  the  date  of  withdrawal 

shall  be  included  in  the  withdrawal  entry  relating  to  such  item. 

Note  A. — In  the  case  of  continuous  structures  like  water,  mains,  etc., 
the  record  shall  be  itemizecf  to  the  extent  that  no  item  shall  contain  more  than 
one  operating  division  or  section  or  more  than  one  type  of  construction.  The  entry 
for  any  item  shall  so  specify  the  location  and  the  principal  physical  characteristics 
(such  as  size,  weight,  type,  etc.)  of  the  chief  constituent  parts  of  the  item  that  iden- 
tification may  be  assured. 

Note  B. — The  date  when  an  item  c-f  fixed  capital  is  placed  in  service  may,  if 
preferred,  be  kept  in  the  engineering  records. 

5.  Application  of  Classification. 

The  accounts  in  this  classification  shall  include  all  expenditures  for 
fixed  capital  regardless  of  the  way  in"  which  the  funds  for  the  con- 
struction or  acquisition  have  been  provided.  Such  expenditures  shall 
not  be  charged  to  Operating  Expense,  Income,  Surplus,  or  to  special 
funds  in  such  manner  as  to  exclude  from  the  property  accounts  any 
expenditure  for  fixed  capital. 

These  accounts  shall  also  include  the  necessary  credits  to  represent 
the  cost  originally  charged  to  them  of  property  or  equipment  aban- 
doned, destroyed,  sold,  or  otherwise  retired  from  service.  Wherever 
the  term  original  cost  is  referred  to  in  this  classification,  and  such  cost 
can  not  be  ascertained,  an  estimate  of  the  original  cost  shall  be  used. 

6.  Salvage  and  Insurance. 

Salvage,  as  the  term  is  employed  in  this  classification,  means  the 
value  to  the  accounting  company,  based  upon  a  fair  market  price,  of 
equipment  or  other  material  recovered  in  the  process  of  repairing,  re- 
placing, or  abandoning  plant  and  equipment;  or  the  net  amount  re- 
ceived from  its  sale  if  the  material  is  not  retained  by  the  accounting 
company.  Salvage  recovered  in  connection  with  a  replacement  or 
abandonment  involving  a  deduction  from  fixed  capital  accounts  shall 
be  credited  against  the  account  to  which  the  retirement  loss  is  charge- 
able. Salvage  recovered  in  connection  with  maintenance  expenses  not 
involving  deductions  from  fixed  capital  accounts  shall,  so  far  as  practi- 
cable, be  credited  to  the  appropriate  maintenance  accounts.  Insur- 
ance recovered  on  property  damaged  or  destroyed  shall  be  treated  in 
the  same  manner  as  salvage. 

7.    Withdrawals  or  Retirements. 

To  the  end  that  the  capital  accounts  shall  at  all  times  disclose  the 


FIXED    CAPITAL  ACCOUNTS  31 

cost  of  all  property  in  service,  the  cost  of  retired  capital,  whether  re- 
placed or  not,  must  be  deducted  from  (i.  e.,  credited  to)  the  account, 
or  accounts,  in  this  classification  to  which  such  cost  is  chargeable. 
Every  water  corporation  is  therefore  required  to  take  suchme  asures 
and  establish  such  procedure  as  will  insure  strict  compliance  with 
these  requirements.  When  anything  is  worn  out,  lost,  sold,  destroyed, 
abandoned,  surrendered  upon  lapse  of  title,  becomes  permanently  un- 
serviceable or  is  withdrawn  or  retired  from  service  for  any  other  reason, 
the  amount  at  which  such  thing  stood  charged  in  the  capital  account 
shall  be  credited  to  the  appropriate  capital  account,  and  the  entry  of 
such  credit  shall  cite  by  name  and  page  of  book  or  other  record  the 
original  entry  of  cost  of  the  thing  retired.  If  there  is  no  such  original 
entry,  that  fact  shall  be  stated  in  connection  with  the  credit  entry- 
If  the  amount  originally  charged  (i.  e.,  the  ledger  value)  is  not  sepa- 
rately recorded,  it  shall  be  taken  to  be  the  proportionate  share  of  said 
property  in  the  value  of  the  entire  group  in  which  the  property  is  in- 
cluded.   The  entry  shall  state  the  fact  of  such  estimation. 

Credits  for  original  cost  of  property  retired  should  include  such  part 
of  the  overhead  cost  as  is  equitably  assignable  to  the  item  retired. 

When  the  cost  of  retired  property  is  credited  to  the  appropriate 
fixed  capital  accounts,  it  shall  be  concurrently  charged  (less  any  sal- 
vage or  insurance  that  there  may  be  on  the  retired  property)  to  account 
No.  251  "Retirement  Reserve"  to  the  extent  that  the  total  balance 
in  the  reserv^e  is  sufficient  to  cover  such  loss;  the  remainder,  if  any, 
representing  such  part  of  the  loss  due  to  the  retirement  as  has  not 
been  provided  for  in  advance  by  the  accumulation  of  a  retirement  re- 
serve, shall,  with  the  consent  of  the  regulatory  commission,  be  charged 
to  suspense  account  No.  132  "Property  Abandoned"  to  be  amortized 
in  such  manner  as  may  be  determined. 

The  cost  of  dismantling,  tearing  down,  or  removing  any  discarded 
plant  or  equipment  shall  be  considered  a  part  of  the  retirement  loss 
^nd  charged  to  the  "Retirement  Reserve"  or  to  "Property  Aban- 
doned" in  accordance  with  the  provisions  of  the  foregoing  paragraph. 
When  any  replacement  takes  the  form  of  reconstructing  or  converting 
existing  property  in  such  a  way  that  the  cost  of  the  entire  project  can- 
not be  accurately  assigned  as  between  the  cost  of  putting  in  the  new 
property,  and  the  cost  of  taking  out  the  old,  no  greater  proportion  of 
the  cost  of  the  project  shall  be  charged  to  fixed  capital  accounts  than 
would  equal  the  cost  of  new  plant  or  equipment  having  equivalent 
capacity  and  expectation  of  ser\dceable  life.  Such  part  of  the  cost  of 
a  reconstruction  project  as  is  not  chargeable  to  fixed  capital  shall  be 


32  FIXED    CAPITAL   ACCOUNTS 

considered  a  retirement  loss  and  charged  to  the  "Retirement  Reserve" 
or  to  "Property  Abandoned"  as  already  provided. 

The  foregoing  instructions  do  not  apply  to  the  retirement  of  those 
minor  parts,  the  charges  for  replacing  which  are  made  directly  to 
maintenance  expense  accounts. 

Note  A. — The  foregoing  rule  shall  not  be  applied  to  capital  temporarily  out  of 
service.  In  their  annual  reports  to  the  regulatory  commission,  corporations  may- 
be required  to  give  particulars  concerning  all  capital  temporarily  disused  and  not 
credited  to  the  proper  capital  account  in  accordance  with  the  foregoing  rule. 

Note  B. — No  receiver  or  other  person  temporarily  in  charge  of  a  water 
corporation  shall  be  relieved  of  the  foregoing  requirement  through  failure  to  obtain 
the  records  of  the  corporation.  If,  by  reason  of  the  absence  oi  the  corporate  records, 
he  is  unable  to  make  the  proper  credits  to  the  capital  accounts  of  the  corporation 
for  retirements,  he  shall  open  on  his  books  the  two  historical  accounts  "Cost  of 
Property  Retired  during  the  Receivership"  and  "Loss  on  Property  Retired  during 
the  Receivership"  and  credit  to  the  former  accotmt  the  original  cost  in  accordance 
with  the  foregoing  requirement,  concurrently  charging  the  same  amount  (less  sal- 
vage, if  any)  to  the  latter  accovmt. 

8.  Improvements  on  Leased  Property. 

The  cost  of  additions  to  and  betterments  of  leased  property  should 
be  charged  to  a  sub-account  under  the  appropriate  fixed  capital  ac- 
count, and  retirement  losses  in  connection  therewith  treated  in  the 
same  manner  as  on  company-owned  property.  In  case  the  full  benefit 
of  improvements  will  not  be  obtained  by  the  lessee  because  of  rever- 
sion to  the  lessor  at  the  expiration  of  the  lease,  the  cost  of  improve- 
ments may  be  charged  to  suspense  and  cleared  by  uniform  charges  to 
rent  deductions  within  the  period  of  the  lease.  Ordinary  current  re- 
pairs, including  minor  rearrangements  and  changes  in  connection  with 
leased  buildings,  should  be  charged  to  the  appropriate  maintenance 
account.  Expenditures  charged  to  lessors  or  for  which  lessors  are  re- 
quired under  the  lease-hold  agreement  to  reimburse  the  lessee  prior 
to  the  tennination  of  the  lease  should  not  be  charged  to  the  fixed 
capital  accounts  of  the  lessee. 

9.  Salvage  from  Equipment,  Tools,  etc. 

When  the  cost  of  any  work  equipment,  machinery,  tools,  or  ma- 
terials and  suppHes  obtained  for  use  in  construction  work  has  been 
charged  to  accounts  in  this  classification  and  the  entire  value  thereof 
has  not  been  consumed  in  the  work,  the  residual  value  of  such  work 
equipment,  machinery,  tools,  or  materials  and  supplies  shall  be 
credited  upon  the  completion  of  the  work  to  the  accounts  to  which 
originally  charged,  and  concurrently  charged  to  the  material  and 
supply  account  or  other  appropriate  accounts. 


FIXED    CAPITAL   ACCOUNTS  33 

10.     Sub-accounts  for  Departmental  Capital. 

The  fixed  capital  accounts  should  be  so  subdivided  as  to  distinguish 
clearly  between  general  capital  and  departmental  capital.  Sub- 
accounts for  departmental  capital  should  be  so  entitled  and  con- 
structed as  to  enable  the  corporation  to  report  in  the  detail  indicated 
in  the  following  classification. the  fixed  capital  devoted  to  each  par- 
ticular department  or  jointly  to  any  specific  group  of  departments. 


v34  FIXED    CAPITAL   ACCOUNTS 

TEXT  PERTAINING  TO  FIXED  CAPITAL  ACCOUNTS 

301.  Organization. 

This  account  shall  include  all  fees  paid  to  governments  for  the 
privilege  of  incorporatipn  and  all  office  and  other  expenditures  inci- 
dent to  organizing  the  corporation  or  other  enterprise  and  putting  it 
into  readiness  to  do  business.  This  covers  cost  of  preparing  and  dis- 
tributing prospectuses,  cost  of  soliciting  subscriptions  for  stock  (but 
not  for  loans  or  for  the  purchase  of  bonds  or  other  evidences  of  in- 
debtedness), cash  fees  paid  to  promoters  and  the  actual  cash  value 
at  the  time  of  organization  of  securities  paid  to  promoters  for  their 
services  in  organizing  the  enterprise,  counsel  fees,  cost  of  preparing 
and  issuing  certificates  of  stock  and  cost  of  procuring  certificates  of 
necessity  from  state  authorities  and  other  like  costs;  also  costs  inci- 
dent to  preparing  and  filing  certificates  of  authorization  of  increase 
of  capital  stock  and  to  the  negotiation  and  issue  of  stock  thereunder, 
and  of  preparing  and  filing  certificates  of  amendment  of  articles  of 
incorporation.  This  account  should  not  include  any  discount  on 
stocks  or  other  securities  issued,  nor  should  it  include  any  costs  in- 
cident to  negotiating  loans  or  selling  bonds  or  other  evidences  of  in- 
debtedness. 

Note. — Cost  of  preparing  and  filing  papers  in  connection  with  the  extension  of 
the  term  of  incorporation  or  with  reincorporation  consequent  upon  reorganization 
should  be  charged  to  account  No.  781.24,  "Law  Expenses,"  or,  by  companies  in- 
"Class  C"  or  "Class  D,"  to  the  account  of  which  "Law  Expenses"  is  a  subdivision. 

302.  Franchises. 

This  account  shall  include  amounts  actually  paid  to  a  state  or  to 
a  political  subdivision  thereof  in  consideration  of  franchises  running 
in  perpetuity  or  for  a  specified  term  of  more  than  one  year  and  neces- 
sary to  the  conduct  of  the  accounting  company's  operations.  If  any 
such  franchise  is  acquired  by  a  mesne  assignment,  the  charge  to  this 
account  in  respect  thereof  should  not  exceed  the  amount  actually  paid 
therefor  by  the  corporation  to  its  assignor,  nor  should  it  exceed  the 
amount  specified  above.  Any  excess  of  the  amount  actually  paid  by 
the  corporation  over  the  amount  above  specified  should  be  charged 
to  account  No.  303,  "Miscellaneous  Intangible  Capital." 

303.  Miscellaneous  Intangible  Capital. 

This  account  shall  include  the  cost  of  patent  rights,  licenses,  privi- 
leges, and  other  intangible  property  not  elsewhere  provided  for;  and 
all  other  fixed  capital  charges  which  are  not  specifically  assignable  to 
some  other  account  in  this  classification. 


FIXED    CAPITAL  ACCOUNTS  35 

NoTE.--When  any  corporation  desires  to  reclassify,  according  to  the  Uniform 
Classification  of  Accounts,  the  book  accounts  representing  its  investment  in  plant  and 
equipment  prior  to  the  effective  date  of  this  classification,  any  remainder  of  the 
original  total  book  value  over  the  amount  determined  as  properly  chargeable  to 
other  prescribed  accounts  (including  profit  and  loss  or  reserve  accounts  in  cases 
where  it  is  found  that  part  of  the  original  total  book  value  is  properly  chargeable 
to  such  accounts)  may  be  charged  to  "Miscellaneous  Intangible  Capital."  When 
such  a  reclassification  is  undertaken  by  the  accounting  company,  and  has  not  been 
passed  upon  by  the  regulatory  commission,  acceptance  by  the  commission  of  re- 
ports showing  the  revised  balances  shall  not  commit  it  to  the  approval  of  the  amounts 
thus  set  up. 

311.    Land. 

This  account  shall  include  the  cost  to  the  utility  of  all  lands  used 
and  useful  in  its  water  operation,  embracing  source  of  water  supply 
lands,  pumping  station  land,  purification  land,  rights  of  way  for 
transmission  and  distribution  facilities,  pipe  lines,  and  ditches,  where 
such  rights  have  lives  in  excess  of  one  year  from  the  date  when  such 
land  is  placed  in  service.  Such  cost  includes,  when  assumed  or  paid 
by  the  purchaser  in  its  own  behalf,  cost  of  registration  of  title,  cost 
of  examination  of  title,  conveyancer's  and  notary's  fees,  purchasing 
agent's  commission  or  fees,  or  proportion  of  purchasing  agent's  salary, 
taxes  accrued  to  date  of  transfer  of  title,  and  all  liens  upon  the  title 
acquired;  cost  of  obtaining  consents  and  payments  for  abutting 
damages ;  also  the  first  cost  of  acquiring  leaseholds  of  land  for  rights 
of  way  with  a  life  of  more  than  one  year,  but  not  including  the  rents 
paid  periodically  in  consideration  of  rights  obtained  under  such  leases. 

This  account  also  includes  special  assessments  levied  by  public 
authorities  on  the  basis  of  benefits  for  streets  and  other  public  im- 
provements, such  as  nej^  roads,  new  bridges,  new  sewers,  new  pave- 
ments, new  curbing,  etc.,  but  not  any  taxes  levied  to  provide  for 
maintenance  of  such  improvements. 

The  cost  of  buildings  and  other  improvements  should  not  be  in- 
cluded in  this  account.  If  at  the  time  of  acquisition  of  an  interest 
in  lands  it  extends  to  buildings  or  other  improvements  thereon,  which 
improvements  are  devoted  by  the  accounting  company  to  its  water 
operations,  and  the  contract  of  acquisition  does  not  determine  the 
price  of  such  improvements,  they  should  be  appraised  at  their  fair 
cash  value  for  use  in  such  operations,  and  such  appraised  value  should 
be  charged  to  the  appropriate  structures  account,  and  excluded  from 
this  account .  If  such  improvements  are  not  devoted  to  water  operations 
but  are  devoted  to  other  operations  or  held  as  investments,  the  cost 
(or  appraised  value  if  Lhe  cost  is  not  determined  in  the  contract  of 
acquisition)  should  be  charged  to  the  appropriate  investment  account 
or  capital  account  for  other  operation.     If  the  improvements  are  re- 


36  FIXED    CAPITAL   ACCOUNTS 

moved  or  wrecked,  the  cost  of  removing  or  wrecking  them  should  be 
charged  and  the  salvage  credited  to  the  land  account. 

Net  proceeds  from  the  sale  of  timber,  cordwood,  or  other  property- 
purchased  with  rights  of  way  or  other  lands  should  be  credited  to 
this  account.  ^ 

This  account  may  be  sub-divided  as  follows,  and  so  far  as  prac- 
ticable, records  of  the  cost  of  land  devoted  to  water  operations  should 
be  kept  in  the  detail  indicated.  Land  used  both  for  general  office 
and  departmental  purposes  may  be  classed  as  "Miscellaneous." 

a.  Source  of  supply  land  and  water  rights. 

h.  Pumping  station  land. 

c.  Purification  land. 

d.  Storage  land. 

e.  Transmission  and  distribution  lands  and  rights  of  way. 
e-\.  Transmission  land  and  rights  of  way. 

e-2.  Distribution  land  and  rights  of  way. 

/.  General  office  lands. 

g.  Miscellaneous  land  devoted  to  water  operations. 

g-1.  Stores  department  land. 

g-2.  General  shops  land. 

g-3.  Garage  land,  etc. 

312.    Structures. 

This  account  shall  include  all  permanent  buildings  and  structures 
to  house,  support,  or  safeguard  persons  or  property  with  all  appur- 
tenant fixtures,  improvements  to  land  and  other  constructions. 

Buildings  shall  include  all  fixtures  attached  •  to  and  forming  a 
permanent  part  thereof,  such  as  water  pipes  and  fixtures,  steam 
pipes  and  fixtures  for  heating  and  ventilating,  gas  pipes  and  fixtures 
for  lighting,  etc.,  electric  wiring  and  fixtures  for  lighting,  signaling, 
etc.,  elevators,  cranes  and  hoists  and  the  motive  power  for  operating 
them,  building  refrigerating  systems  and  furnaces,  boilers,  etc., 
specially  provided  for  such  systems,  storage  batteries  and  electric 
generators  with  their  prime  movers  specially  provided  for  building 
service,  conduits,  including  cable  conduits  which  form  a  part  of  the 
building,  but  not  including  conduits  which  would  be  removed  with 
their  contents,  and  subways  or  areaways  directly  connected  to  and 
forming  a  part  of  the  building.  This  account  also  includes  cost  of 
excavations,  brick  or  concrete  chimneys  and  such  piers  and  founda- 
tions for  machinery  and  apparatus  as  are  designed  to  be  as  permanent 


FIXED    CAPITAL  ACCOUNTS  37 

as  the  buildings  and  independent  of  their  use  in  connection  with  any 
particular  units  of  equipment.  Charge  also  the  cost  of  architect's 
plans  and  of  superintendence  of  construction. 

Improvements  to  land  include  roadways,  fences,  sidewalks,  sewer 
systems,  water  systems,  yard  lighting  systems,  grading  and  land- 
scape gardening,  docks  and  water  front  improvements,  railroad  tracks, 
tramways  and  trestles,  canals,  bench  marks,  monuments,  and  any 
other  permanent  structures  which  are  an  improvement  to  the  property 

This  account  may  be  subdivided  as  follows,  and  so  far  as  prac- 
ticable, records  of  the  cost  of  the  structure  devoted  to  water  opera- 
tions should  be  kept  in  the  detail  indicated.  Structures  used  both 
for  general  offices  and  departmental  purposes  may  be  classed  as 
"Miscellaneous." 

Note. — Where  general  offices,  shops,  storehouses,  stables,  garages,  etc.,  are 
located  in  one  of  the  buildings  under  sub-accounts  A,  B,  and  C,  no  part  of  the  cost 
of  such  buildings  should  be  charged  to  this  account  (sub-account  D.) 

a.  Source  of  water  supply  structures. 

b.  Pumping  station  building  and  fixtures. 

c.  Purification  buildings  and  fixtures. 

d.  Reservoirs  and  standpipes. 

e.  Distribution  structures. 

/.  General  office  buildings  and  fixtures. 

g.  Miscellaneous  structures  devoted  to  water  operations. 

g-1.  Store  department  structures. 

g-2.  General  shop  structures. 

g-3.  Garage  structures,  etc. 

313.     Boiler  Plant  Equipment. 

This  account  shall  include  the  cost  installed  of  all  furnaces,  boilers, 
and  boiler  apparatus  and  accessories  devoted  to  the  production  of 
steam  for  use  in  pumping  water.  This  covers  boilers  and  valves 
thereto  attached,  appurtenant  furnaces  and  grates,  and  flues  leading 
to  smokestacks  and  chimneys,  and  the  specially  provided  foundations 
and  settings  of  such  boilers  and  appurtenances;  also  metal  smoke- 
stacks. It  also  covers  mechanical  stokers  and  other  like  apparatus 
for  regulating  the  supply  of  fuel,  etc.,  feed  and  hot  water  heaters 
and  economizers,  injectors,  filters,  feed  pumps,  blower  engines,  coal 
conveyors,  ash  conveyors,  reservoirs  for  boiler  or  condenser  water 
and  intake  and  discharge  water  ])ipes  and  pipe  lines  and  tunnels,  air 
pi]3es  and  general  service  pij^es,  steam  traps,  drains  and  separators, 
and  pipes  for  conducting  steam  from  the  boiler  to  the  engine  or  to 
the  gas  producers,  exhaust  pipes,  etc.  This  account  shall  not  include 
sU.'am  pipes  whose  primary  purpose  is  the  heating  of  buildings. 


38  FIXED    CAPITAL  ACCOUNTS 

Note. — When  the  system  for  supplying  boiler  or  condenser  water  is  elaborate, 
as  when  it  includes  a  dam,  reservoir,  canal,  and  pipe  line,  the  cost  should  not  be 
charged  to  this  account  but  to  a  special  sub-account  under  account  No.  312,  "Struc- 
tures," entitled  "Water  Supply  Structures — Steam." 

314.  Steam  Power  dumping  Equipment. 

This  account  shall  include  the  cost  of  all  pumping  equipment  driven 
by  steam  power.  Thi§  includes  engines,  turbines,  pumps,  condensers, 
vacuum  pumps,  and  lubricating  systems. 

315.  Electric  Power  Pumping  Equipment. 

This  account  shall  include  the  cost  of  all  pumping  equipment  driven 
by  electric  power,  including  electric  prime  movers,  pumps,  lubricating 
systems,  s^wdtch  boards  and  other  electric  apparatus. 

316.  Gas  or  Oil  Power  Pumping  Equipment. 

This  account  shall  include  the  cost  of  all  pumping  equipment  driven 
by  gas  or  oil  power,  including  gas  and  gasoline  or  oil  prime  movers, 
igniting  and  starting  apparatus,  pumps,  lubricating  systems,  etc.  It 
also  shall  include  the  cost  of  gas  producers  and  accessories  devoted 
to  the  production  of  gas  for  purposes  of  operating  gas  engines.  This 
includes  producers,  economizers,  regenerators,  vaporizers,  steam  in- 
jectors, scrubbers,  exhausters,  seals,  especially  provided  boilers  and 
pumps,  flues,  blower  engines  and  accessory  apparatus. 

317.  Hydraulic  Power  Pumping  Equipment. 

This  account  shall  include  the  cost  of  the  hydraulic  power  works 
and  all  equipment  of  the  hydraulic  power  pumping  station.  This 
includes  the  cost  of  all  dams,  canals  and  flumes  devoted  to  the  pro- 
duction of  hydraulic  power  and  the  delivery  of  water  to  the  head 
gates  of  the  water  wheels  and  turbines.  Also  charge  with  the  cost 
of  wasteways  from  the  outlet  of  the  draft  tube  to  the  point  of  the 
final  discharge,  including  the  cost  of  all  gates,  valves  and  other  acces- 
sories, sluices,  forebays,  etc.,  used  in  the  development  of  the  hydraulic 
power  and  all  accessory  canals  and  aqueducts. 

Charge  also  with  the  cost  of  all  water  wheels  and  turbines  used  in 
the  pumping  of  water  by  hydraulic  power  including  their  foundations 
and  settings,  governors,  and  all  apparatus  appurtenant  thereto  from 
the  head  gates  and  governors  to  the  wasteways.  Charge  this  account 
also  with  the  cost  of  all  pumps  at  the  station  operated  by  hydraulic  power. 

Note. — Utilities  desiring  to  do  so  may  subdivide  this  account  as  follows: 

a.  Hydraulic  power  works. 

b.  Water  wheels  and  turbines. 

c.  Pumps  and  pump  equipment. 

d.  Hydraulic  power  pumping  station  auxiliary  equipment. 


FIXED    CAPITAL  ACCOUNTS  39 

318.  Miscellaneous  Pumping  Equipment. 

This  account  shall  include  the  cost  of  all  miscellaneous  equipment; 
this  includes  horses,  wagons,  harness,  automobiles,  motorcycles,  bi- 
cycles, furniture  and  fixtures  (when  not  a  permanent  part  of  build- 
ings, etc.) 

319.  Purification  System. 

This  account  shall  include  the  cost  of  all  apparatus  and  equipment 
used  for  purification  of  water.  This  includes  settling  basins,  filter 
beds,  mechanical  filters,  and  all  auxiliary  apparatus  for  purifying 
water,  together  with  protecting  structures  erected  in  connection 
therewith. 

320.  Transmission  Mains  or  Canals. 

This  account  shall  include  the  cost  of  all  transmission  mains  either 
pipes  or  canals  used  for  delivering  water 'from  the  pumping  station 
impounding  reservoir  or  other  source  of  supply  to  the  distribution 
reservoirs  or  mains;  this  includes  the  cost  of  all  trenching  for  pipes 
or  canals,  placing  transmission  main  pipes,  special  castings,  lead  pack- 
ing, shut-offs,  manholes,  valves  and  the  cost  of  filling  trenches,  and 
restoring  the  surface  of  the  street  to  its  former  condition  as  required 
by  the  municipal  authorities,  canal  excavation  checks,  drops,  bridges, 
spillways,  and  miscellaneous  canal  structures. 

Note. — Transmission  main,  as  distinguished  from  distribution  main,  is  used  for 
conveying  water  to  the  distribution  storage  reservoirs,  tanks,  or  standpipe,  and 
has  no  direct  service  connection  with  consumers;  mains  having  such  connections 
will  be  classed  as  distribution  mains,  or  if  the  distance  between  the  source  of  supply 
and  the  first  direct  service  connection  with  consumers  is  considerable,  the  portion 
between  the  source  of  supply  and  the  first  direct  service  connection  with  consumers 
will  be  classed  as  transmission  main. 

The    cost    of    replacing  paving  disturbed  in  laying  transmission 

mains  shall  be  included  in  a  sub-account. 

Note. — On  an  irrigation  system,  the  transmission  is  the  main  canal  from  which 
the  laterals  are  supplied. 

321.  Distribution  Mains  or  Canals. 

This  account  shall  include  the  cost  of  all  distribution  mains  either 
pipes  or  canals  in  place.  This  includes  all  mains  or  canals  used  in 
the  distribution  of  water  to  the  beginning  of  the  service  connections, 
including  the  cost  of  trenching,  placing  distribution  main  pipe,  special 
work  and  castings,  lead  packing,  shut-offs,  manholes,  valves,  and  the 
filling  of  trenches  and  restoring  the  surface  of  the  street  to  its  former 
condition  as  required  by  the  municipal  authorities;  also  excavations, 
checks,  spillways,  bridges,  waterways,  main  lateral  hcadgates,  and  all 
structures  in  lateral  canals. 


40  FIXED    CAPITAL  ACCOUNTS 

Note. — A  distribution  main  begins  at  the  outlet  valve  of  the  pump,  when  such 
main  has  direct  service  connections  with  consumers  at  a  relative  short  distance 
from  the  pumping  station.  If  water  is  pumped  into  a  storage  reservoir,  tank  or 
standpipe  through  a  main  having  no  direct  service  connections  with  consumers, 
such  main  wiU  be  classed  as  transmission,  and  the  distribution  main  will  begin  at 
the  outlet  valve  of  such  storage  reservoir,  tank  or  standpipe. 

The  cost  of  replacing  paving  disturbed  in  laying  distribution  mains  shall  be  in- 
cluded in  a  sub-accoimt.      ^ 

322.  Services. 

This  account  shall  include  the  cost  of  corporation's  property  in 
services  in  or  leading  to  the  consumer's  premises.  This  includes  the 
cost  of  material  in  place,  the  cost  of  trenching  for  placing  services, 
service  pipes,  service  boxes,  stop  cocks,  etc.,  and  the  cost  of  filHng 
the  trenches  and  restoring  the  surface  to  its  proper  conditioni. 

323.  Consumers'  Meters  and  Measuring  Devices. 

This  account  shall  include  the  cost  of  all  meters,  measuring  devices, 
weirs,  etc.,  used  or  to  be  used  in  measuring  or  determining  water  de- 
livered to  consumers.  This  covers  in  addition  to  cost  of  meters  to 
point  of  delivery  on  the  accounting  company's  premises  such  inci- 
dentals as  the  cost  of  meter  badges  and  their  attachment  to  the  meters, 
testing  and  storing  new  meters  and  the  first  set  of  meter  fittings,  con- 
nections, and  shelves. 

Note  A. — ^This  account  does  not  include  the  cost  of  the  utility's  meters  which 
record  the  output  of  the  station.  Such  cost  shaU  be  charged  to  the  appropriate 
power  plant  equipment  accoimt. 

Note  B. — ^The  cost  of  setting,  removing,  or  resetting  consumer's  meters  shall  not 
be  dasLTged  to  this  account. 

324.  Consumers'  Meter  and  Measuring  Device  Installation. 

This  account  shall  include  the  cost  of  the  first  setting  of  meters  for 
determining  the  amount  of  water  delivered  upon  the  premises  of  con- 
sumers. When  any  meter  service  is.  permanently  discontinued  this 
account  shall  be  credited  with  an  amount  representing  the  average 
installation  cost  of  a  consumer's  meter. 

Note. — Cost  of  removing  consumers'  meters  and  of  setting  other  meters  sub- 
stituted for  them,  shall  not  be  charged  to  this  account,  but  to  account  No.  751 — 5» 
"Removing  and  resetting  meters  and  devices." 

325.  Hydrants. 

This  account  shall  include  the  cost  of  water  utility's  property  in  all 
hydrants  placed  in  the  distribution  system.  This  includes  the  cost 
of  all  materials  in  place,  the  cost  of  trenching  for  placing  hydrants, 
hydrant  connections,  etc.,  and  the  cost  of  filling  trenches  and  restor- 
ing the  surface  to  its  proper  condition. 


FIXED    CAPITAL   ACCOUNTS  41 

326.  Fire  Cisterns,  Basins,  Fountains  and  Troughs. 

This  account  shall  include  the  cost  of  the  utility's  property  in  all 
fire  cisterns,  basins,  fountains  and  troughs;  digging  and  trenching  in 
connection  therewith,  and  restoring  the  pavement  to  its  original  con- 
dition or  that  required  by  municipal  ordinances. 

327.  General  Equipment. 

This  account  shall  include  the  cost  installed  of  all  equipment  coming 
under  the  following  heads : 

a.  Office  Equipment.  This  account  includes  the  cost  of  all 
office  and  service  equipment  not  permanently  attached  to  buildings, 
such  as  chairs,  desks,  tables,  movable  safes,  filing  cabinets,  drafting 
room  equipment,  typewriters,  adding  machines,  addressographs, 
portable  lamps,  lockers,  clocks,  and  fans,  chronograph  systems, 
pneumatic  tube  systems,  lunch  room  equipment,  doctors'  equipment, 
pulmotors,  mechanical  office  appliances,  floor  covering  and  other  like 
office  appliances  and  equipment.  Small  articles  of  slight  value  or  of 
short  life  should  not  be  charged  to  this  account  but  to  the  appropriate 
operating  account. 

b.  Shop  Equipment.  This  includes  the  cost  of  all  equipment 
specially  provided  for  shops  but  not  so  permanently  attached  as  to 
be  chargeable  to  account  312,  "Structures,"  such  as  furnaces,  boilers, 
gas  producers,  engines,  electric  generators,  and  other  power  apparatus 
operating  machinery  in  such  shops;  machine  tools,  hoists,  shafting, 
belts,  and  all  like  shop  equipment,  also  such  smithing  equipment  in 
shops  as  is  used  principally  for  other  general  purposes  than  shoeing 
horses  and  repairing  vehicles;  and  all  specially  provided  foundations 
not  expected  to  outlast  the  machinery  or  apparatus  mounted  thereon. 

c.  Store  Equipment.  This  includes  the  cost  of  all  equipment  for 
the  receiving,  shipping,  handling  and  storage  of  materials  and  sup- 
plies. This  covers  loading  and. unloading  equipment  (except  cranes 
when  they  are  of  such  a  nature  as  to  be  charged  to  buildings) ;  der- 
ricks, portable  cranes,  hoists,  chain  falls,  scales,  trucks,  counters, 
shelving,  wheel-barrows,  and  the  like. 

d.  Transportation  Equipment.  This  includes  the  cost  of  equip- 
ment for  general  transportation  purposes  such  as  automobiles,  motor 
trucks,  trailers,  tractors,-  motorcycles  and  other  vehicles,  battery 
charging  outfits,  gasoline  and  oil  storage  tanks  and  pumps  and  other 
eqviipment;  horses,  harness,  drays  and  wagons;  equipment  for  shoeing 


42  *  FIXED    CAPITAL   ACCOUNTS 

horses,  and  equipment  for  harness  repair  shop,  vehicle  repair  shop, 
and  automobile  repair  shop,  if  this  equipment  is  devoted  exclusively 
to  these  purposes. 

e.  Telephone,  Telegraph  and  Wireless  System.  This  includes 
the  cost  of  all  telephone,  telegraph  and  wireless  lines  and  equipment 
for  general  use  in  connection  with  water  operations,  including  poles 
and  fixtures  used  exclusively  for  telephone  and  telegraph  wires ;  wires, 
cables,  telephone  booths,  instruments,  switchboards,  gongs,  dynam- 
eters,  towers,  antennae,  etc. 

f.  General  Laboratory  Equipment.  This  includes  the  cost  of 
all  meter  and  other  testing  apparatus  and  laboratory  equipment  not 
elsewhere  provided  for. 

g.  Miscellaneous  Equipment.  This  includes  any  other  miscel- 
laneous equipment  not  elsewhere  provided  for,  such  as  construction 
equipment,  including  boilers,  engines,  motors,  hoists,  concrete  mixers 
and  distributing  apparatus,  pumps,  air  compressors,  riveters,  lathes, 
power  saws,  pipe  machines,  forges,  steam  hammers,  pile-drivers,  steam 
shovels,  lighters,  industrial  track  and  cars,  etc.;  and  any  equipment 
of  a  permanent  nature  which  can  not  be  properly  charged  to  any  of 
the  foregoing  accounts. 

Note  A. — ^The  cost  of  small  portable  tools  and  implements,  such  as  hammers, 
saws,  wrenches,  files,  jacks,  wire  cutters,  climbing  irons,  etc.,  shall  not  be  charged 
to  this  account.  Such  items  shall  be  carried  in  account  No.  115,  "Materials  and 
Supplies,"  until  issued  for  use  when  "Materials  and  Supplies"  shall  be  credited  and 
the  appropriate  work  order  or  other  account  charged  with  the  cost  of  tools  or  imple- 
ments so  issued.  The  cost  of  maintaining  tools  and  implements  shall  be  charged 
to  the  expense  of  the  department  to  which  they  are  assigned. 

Note  B. — So  far  as  practicable  separate  sub-accounts  sliall  be  maintained  for 
the  equipment  of  each  individual  water  plant,  office  building,  shop,  garage,  etc. 

328.     Miscellaneous  Tangible  Capital. 

This  account  shall  include  the  cost  of  all  tangible  water  capital  not 
elsewhere  provided  for. 

351.     Engineering  and  Superintendence. 

This  account  shall  include  all  expenditures  for  services  of  engineers, 
draftsmen,  and  superintendents  employed  on  preliminary  and  con« 
stfuction  work,  and  all  expenses  incident  to  the  work  when  such  dis- 
bursements can  not  be  assigned  to  a  particular  tangible  capital  accounf. 

Note  A. — When, any  of  the  expenses  designated  can  be  charged  direct  to  the 
primary  account  for  which  incurred,  they  shall  be  so  charged.  But  no  charges  shall 
be  made  to  permanent  investment  accounts  for  incidental  services  or  engineering 
performed  by  the  regular  employees  and  officers  of  the  accounting  company  unless 
they  have  been  specially  a&iignedto  such  work. 


FIXED    CAPITAL   ACCOUNTS  43 

Note  B. — Expenditures  for  tentative  or  preliminary  designs  or  experiiiiehts 
shall  be  carried  in  a  suspense  account  until  it  is  determined  whether  or  not  tq  under- 
take the  construction.  If  the  project  is  continued,  such  expenditures  shall  then  be 
transferred  to  the  appropriate  fixed  capital  account;  and  if  it  is  abandoned,  they 
shall  be  charged  to  operating  expense,  income,  or  profit  and  loss  accounts  as  may 
be  appropriate. 

352.  Law  Expenditures  During  Construction. 

This  account  shall  include  general  expenditures  of  the  following 
nature  incurred  in  connection  with  the  construction  of  a  water  plant, 
namely,  the  pay  and  expenses  of  all  counsel,  solicitors,  and  attorneys, 
their  clerks  and  attendants,  and  expenses  of  their  offices;  printing 
briefs,  legal  forms,  testimony,  reports,  etc.;  payments  to  arbitrators 
for  the  settlement  of  disputed  questions;  costs  of  suit  and  payments 
of  special  fees,  notarial  fees,  and  witness  fees  and  expenses  connected 
with  taking  depositions;  also  all  legal  and  court  expenses. 

When  any  of  the  expenditures  above  enumerated  can  be  charged 
directly  to  the  account  for  which  incurred,  they  should  be  so  charged 
and  not  to  this  account.  Expenditures  in  connection  with  the  acquisi- 
tion of  right  of  way  or  other  land  should  be  charged  to  account  No. 
311,  "Land."  Law  expenditures  in  connection  with  the  organization 
of  the  corporation  should  be  charged  to  account  No.  301,  "Organiza- 
tions." (See  "Fixed  Capital  Accounts — General  Instructions  and 
Definitions,"  Section  2,  page  28). 

353.  Injuries  and  Damages  During  Construction. 

This  account  shall  include  all  expenditures  incident  to  injuries  to 
persons  or  damages  to  property  of  others  when  caused  directly  in  con- 
nection with  construction  of  water  plant  and  equipment.  This  covers 
fees  and  proportion  of  salaries  and  expenses  of  physicians  and  sur- 
geons; compensation  insurance;  nursing  and  hospital  attendance; 
medical  and  surgical  supplies,  artificial  limbs,  railroad  and  carriage 
fares  for  conveying  injured  persons  and  attendants;  funeral  expenses 
(including  payment  to  undertakers)  proportion  of  pay  and  expenses 
of  claim  adjusters  and  their  clerks,  and  pay  and  expenses  of  em- 
ployees and  others  called  in  consultation  in  relation  to  the  adjustment 
of  claims  coming  under  this  head;  also  witness  fees,  court  costs  and 
amount  of  final  judgments. 

When  any  of  the  expenditures  above  enumerated  can  be  charged 
directly  to  the  account  for  which  incurred,  they  should  be  so  charged, 
and  not  in  this  account.  (See  "Fixed  Capital  Accounts — General  In- 
structions and  Definitions,"  Section  2,  page  28). 


44  FIXED    CAPITAL   ACCOUNTS 

354.  Taxes  During  Construction. 

This  account  shall  include  all  taxes  and  assessments  levied  and  paid 
or  chargeable  on  property  belonging  to  the  accounting  company  while 
such  property  is  under  construction,  and  before  the  plant  is  opened 
for  commercial  operation,  except  special  taxes  assessed  for  street  and 
other  improvements,  svich  as  grading,  sewering,  curbing,  guttering, 
paving  sidewalks,  etc.,  which  should  be  charged  to  the  account  to 
which  the  property  benefited  is  charged. 

Whenever  any  of  the  expenditures  above  enumerated  can  be  charged 
directly  to  the  account  for  which  incurred,  they  should  be  so  charged 
and  not  to  this  account.  (See  "Fixed  Capital  Accounts — General 
Instructions  and  Definitions,"  Section  2,  page  28). 

355.  Interest  During  Construction. 

When  any  bonds,  notes,  or  other  evidences  of  indebtedness  are  sold, 
or  any  interest  bearim^  debt  is  incurred,  for  acquisition  or  construction 
of  plant  and  equipment,  the  interest  accruing  on  the  part  of  the  debt 
representing  cost  of  property  chargeable  to  fixed  capital  accounts 
(less  interest,  if  any,  allowed  on  unexpended  balances)  after  such  fund 
becomes  available  for  use  and  before  the  receipt  or  the  completion  or 
coming  into  service  of  the  property  so  acquired  shall  be  included  in 
this  account. 

When  such  securities  are  sold  at  a  premium,  the  proportion  of  such 
premium  assignable  to  the  time  between  date  of  the  actual  issuance  of 
the  securities  and  the  time  when  the  property  acquired  or  the  improve- 
ment made  becomes  available  for  service  shall  be  credited  to  this 
account. 

This  account  shall  indude  also  such  proportion  of  the  discount  and 
expense  on  long  term  debt  issued  for  construction  purposes  as  is  equit- 
ably assigned  to  the  period  between  the  date  of  the  actual  issuance  of 
the  securities  and  the  time  when  the  property  acquired  or  the  improve- 
ment made  becomes  available  for  the  service  for  which  it  is  intended. 
The  proportion  of  discount  and  expense  thus  chargeable  shall  be  de- 
termined by  the  ratio  between  the  period  prior  to  the  completion  or 
coming  into  service  of  the  facilities  or  improvements  acquired  or  con- 
structed and  the  period  of  the  entire  life  of  the  securities  issued. 

This  account  shall  also  include  reasonable  charges  for  interest  dur- 
ing the  construction  period  on  the  accounting  company's  own  funds 
used  tcmiporarily  during  such  ])eriod  f(jr  construction  purposes. 

When  any  of  the  exj^enditures  above  enumerated  can  be  charged 
directly  to  the  account  for  which  incurred,  they  should  be  so  charged, 


FIXED    CAPITAL  ACCOUNTS  45 

and  not  to  this  account.     (See  "Fixed  Capital  Accounts — General 
Instructions  and  Definitions,"  Section  2,  page  28). 

Note  A. — If  any  securities  issued  or  assumed  by  the  accounting  company  are 
sold  or  exchanged  by  or  for  that  company  for  a  consideration  the  actual  money 
value  of  which  at  the  time  of  such  sale  or  exchange  is  less  than  the  value  of  the 
securities  at  par  and  the  accrued  interest  thereon,  if  any,  the  difference  between 
the  money  value  of  the  consideration  received  and  the  par  value  of  the  securities, 
plus  the  accrued  interest,  shall  be  deemed  discount,  and  in  no  case  (except  as  pro- 
vided in  the  third  paragraph  of  this  account)  shall  discount  be  included  as  part 
of  the  cost  of  anything  charged  in  any  fixed  capital  or  investment  account  pre- 
scribed in  this  classification. 

356.  Miscellaneous  Construction  Expenditures. 

This  account  shall  include  the  salaries  and  expenses  of  the  general 
officers  of  a  water  plant  under  construction,  clerks  in  general  offices 
engaged  on  construction  accounts  or  work;  rent  and  repair  of  general 
offices  when  rented,  with  the  office  expenses;  insurance  during  con- 
struction (except  workmen's  compensation,  the  cost  of  which  is  charge- 
able to  account  No.  353,  "Injuries  and  Damages  during  Construc- 
tion"); also  all  construction  and  equipment  items  of  a  s'pecial  and 
incidental  nature  which  can  not  properly  be  charged  to  any  other 
account  in  this  classification. 

To  this  account  shall  be  credited  discounts  realized  through  prompt 
payment  of  bills  for  materials  and  supplies  used  in  construction  unless 
such  discounts  are  credited  to  the  particular  bills. 

When  any  of  the  expenditures  above  enumerated  can  be  charged 
directly  to  the  account  for  which  incurred,  they  shall  be  so  charged, 
and  not  to  this  account.  (See  ''Fixed  Capital  Accounts — General  In- 
structions and  Definitions,"  Section  2,  page  28). 

Note  A. — This  account  may  include  a  suitable  proportion  of  store  expenses  when 
such  expenses  are  not  assignable  to  specific  materials. 

Note  B. — This  account  should  not  include  any  cost  of  organization  or  any  costs 
or  discounts  connected  with  the  issue  and  disposal  of  stocks,  long  term  debt,  or 
other  securities  and  commercial  paper. 

357.  Fixed  Capital  not  Classified  by  Prescribed  Accounts. 

Under  this  head  shall  be  grouped  the  balances  in  accounts  repre- 
senting the  accounting  company's  investment  in  fixed  capital  prior  to 
the  time  when  it  began  to  follow  the  classification  of  fixed  capital 
accounts  herein  prescribed. 

358.  Cost  of  Plant  and  Equipment  Purchased. 

This  account  shall  include  the  cost  to  the  accounting  company  of 
any  plant  purchased  as  a  whole  when  such  cost  is  not  immediately 
assignable  to  primary  fixed  capital  accounts.    Where  the  contract  of 


46  FIXED    CAPITAL   ACCOUNTS 

purchase  includes  not  only  plant  and  equipment,  but  also  securities 
and  other  assets,  the  appraised  value  of  such  securities  and  other 
assets  shall  be  deducted  from  the  total  cash  cost  and  the  remainder  of 
the  cash  cost  shall  be  charged  to  this  account.  Where  the  considera- 
tion given  for  the  property  purchased  is  other  than  cash,  such  consid- 
eration shall  be  valued  on  a  current  cash  basis.  If  the  consideration 
includes  the  assumption  of  liabilities,  such  liabilities  shall  be  included 
in  the  determination  of  the  cost  at  their  cash  value  at  the  time  the 
contract  is  made.  _ 

This  account  shall  be  used  only  as  a  clearing  account  in  which 
ten^orarily  to  carry  the  cost  of  plant  and  equipment  purchased  for  a 
lump  sum  until  such  time  as  a  plan  for  distributing  such  cost  to  the 
primary  accounts  appropriate  to  the  property  is  approved  by  the  regu- 
latory commission. 

Note  A. — The  value  at  the  time  of  purchase  of  any  securities  or  other  assets 
acquired  shall  be  included  in  the  accounts  appropriate  for  such  assets.  The  par 
value  of  any  liability  assumed  shall  be  included  in  the  appropriate  Hability  accounts 
and  any  necessary  adjustment  between  the  cash  charjged  to  the  property  accounts 
and  par  value  shall  be  made  in  the  appropriate  premium  or  discount  account. 

Note  B. — The  accounting  company  shall  be  prepared  to  furnish  the  regulatory 
commission  upon  demand  a  full  report  of  the  contract  of  acquisition  of  each  plant 
or  portion  thereof  purchased  and  a  statement  showing  in  detail  the  consideration 
given  therefor.  It  shall  procure  in  connection  with  the  acquisition  of  any  such 
plant  and  equipment  all  existing  records,  memoranda,  and  accoimts  in  possession 
or  control  of  the  grantor  relating  to  the  construction  and  improvements  of  such 
plant  and  equipment,  and  shall  preserve  such  records,  memoranda,  and  accounts 
until  authorized  by  the  regulatory  commission  to  destroy  or  otherwise  dispose  of 
them.  Where  the  records,  memoranda,  and  accounts  are  so  intimately  involved 
with  other  records,  memoranda,  and  accoimts  of  the  grantor  as  to  make  their  trans- 
fer impracticable  or  inadvisable,  certified  copies  of  them  shall  be  proctu*ed  and 
obtained  by  the  grantee.  The  verity  of  the  copy  shall  be  certified  by  the  custodian 
of  the  originals. 

359.    Unfinished  Construction. 

This  account  shall  include  the  balances  in  open  work  orders  rep- 
resenting additions  to  plant  and  equipment  when  the  charges  to  such 
work  orders  have  not  been  distributed  to  the  foregoing  fixed  capital 
accounts. 

Note. — This  account  is  intended  to  include  only  charges  for  new  construction 
not  involving  any  replacement.  If,  however,  at  the  beginning  of  a  job  involving 
the  replacement  or  retirement  of  any  fixed  capital  the  accoimting  company  shall 
make  full  credits  therefor  to  the  appropriate  fixed  capital  accounts,  the  cost  of  in- 
stalling new  property  in  substitution  or  replacement  may  be  carried  in  the  fixed 
capital  account  "Unfinished  Construction." 


INCOME   ACCOUNTS  47 


STANDARD  FORM  OF  INCOME  ACCOUNT 

Item  Account 

Income  from  Operating  Properties: 

1  401      Operating  revenues ***     $ 

2  402      Operating  expenses $         *** 

3  403      Uncollectible  bills ♦** 

4  404      Taxes *** 

5  Total  revenue  deductions *** 

6  Operating  income  applicable  to  corporate  and  leased  prop- 

erties   *♦*      $ 

7  411      Rent  for  lease  of  other  water  plant $         *** 

8  412      Joint  facility  rents **♦ 

9  Total  (items  7  and  8) $         *** 

10  415      Rent  accrued  from  lease  of  water  plant — Cr *♦* 

11  Net  rent  deduction  (credit  balance  in  red) *** 

12  Balance  of  income  applicable  to  corporate  property ***      $ 

Income  from  Non-operating  Properties: 

13  421      Miscellaneous  rent  revenues $         *♦* 

14  422      Interest  on  long  term  debt  owned *♦* 

15  423      Miscellaneous  interest  revenues **♦ 

16  424      Dividend  revenues *♦* 

17  425      Income  from  special  funds **♦ 

18  426      Miscellaneous  non-operating  revenues *** 

19  Total  (items  13  to  18  inclusive) $         *** 

20  427      Non-operating  revenue  deductions *** 

21  Total  miscellaneous  income ; . . . .  *** 

22  Gross  corporate  income  (items  12  and  21). ***      $ 

Deductions  from  Gross  Corporate  Income: 

23  431      Interest  on  long  term  debt • $         ♦♦* 

24  432      Miscellaneous  interest  deductions *** 

25  433      Amortization  of  debt  discount  and  expense *** 

26  434      Amortization  of  premium  on  debt — Cr *** 

27  435      Miscellaneous  amortization  chargeable  to  income *** 

28  436      Miscellaneous  deductions  from  gross  corporate  income *** 

29  Total  deductions  from  gross  corporate  income *** 

30  Net  income  (loss  in  red) ***     $ 


48  INCOME   ACCOUNTS 

Disposition  of  Net  Income: 

31  441      Sinking  fund  appropriations $         •** 

32  442      Dividend  appropriations  of  income •  •** 

33  443      Miscellaneous  appropriations  of  net  income. •*♦ 

34  Total  appropriations  of  net  income •** 

35  Balance  transferred  to  surplus •**      % 


■ 
i 


INCOME   ACCOUNTS  49 


INCOME  ACCOUNTS 
General  Instructions  and  Definitions 

1.  Income  Accounts  Defined. 

The  income  accounts  are  those  that  show  the  sources  and  disposi- 
tion of  income  during  a  given  period.  Any  change  in  the  items  shown 
on  a  balance  sheet  at  the  end  of  such  a  period  as  compared  with  a 
balance  sheet  at  the  beginning  of  the  period,  which  is  not  merely  a 
transfer  from  one  balance  sheet  account  to  another,  that  is  to  say, 
any  transaction  which  affects  the  profit  and  loss  balance,  must  be 
explained  by  the  income  accounts  or  by  the  profit  and  loss  accounts. 
A  summary  statement  of  income  accounts  arranged  in  convenient 
form  to  show  the  accounting  history  of  a  given  period  is  usually  called 
collectively  the  ** Income  Account."  Income  accounts  whose  title  and 
definition  plainly  indicate  that  they  are  summaries  of  other  accounts 
are  not  required  to  be  set  up  as  special  ledger  accounts,  though  it 
may  often  be  a  matter  of  bookkeeping  convenience  to  do  so. 

2.  Form  of  Income  Account. 

The  form  in  which  the  income  account  is  stated  is  generally  of  great 

■ 

importance  as  affecting  the  conclusions  that  may  be  drawn  there- 
from concerning  the  results  of  the  enterprise.  The  standard  form 
adopted  for  the  purpose  of  this  classification  is  shown  on  pages  47 
and  48.  In  this  form  of  statement  there  are  certain  terms  used  to 
indicate  divisions  of  the  income  account  which  require  special  defini- 
tion, given  in  the  following  paragraphs. 

3.  Revenues. 

The  word  revenues  as  used  herein  means  all  amounts  of  money 
which  the  accounting  company  receives  or  becomes  lawfully  entitled 
to  recover  for  services  rendered,  for  products  sold,  as  profits  on  mer- 
chandise sold,  or  as  a  return  upon  its  property  (or  interests  in  prop- 
erty). Revenues  are  classified  as  operating  revenues  and  non-operating 
revenues. 

4.  Operating  Revenues. 

Operating  revenues  are  those  derived  from  the  sale  of  products  and 
merchandise,  from  services  rendered,  from  return  on  property  used 
by  the  person  or  corporation  in  its  own  operations,  and  from  interest 
on  current  funds. 


50  INCOME   ACCOUNTS 

5.  Non-operating  Revenues. 

Non-operating  revenues  are  those  derived  as  a  return  upon  the 
property  of  the  accounting  company  in  the  hands  of  others  or  from 
its  interest  in  property  in  the  hands  of  others.  They  may  be  sub- 
classified  as  rents,  interest  dividends,  and  miscellaneous. 

6.  Revenue  Deductions. 

Revenue  deductions  include  expenses,  taxes,  and  uncollectible  bills. 

7.  Expenses. 

Expenses  are  those  outgoes  (including  losses  due  to  the  retirement 
of  capital)  necessary  to  the  production  and  distribution  of  the  com- 
modities sold,  and  the  services  rendered,  and  to  the  collection  of  the 
revenues.  They  are  divided  into  operating  expenses,  and  non-operat- 
ing expenses. 

8.  Taxes. 

Taxes  are  those  annual  or  other  payments  exacted  by  governments 
for  the  purpose  of  raising  funds  for  public  uses. 

9.  Uncollectible  Bills. 

When  a  corporation  is  engaged  regularly  in  rendering  to  general 
consumers  a  service,  or  in  supplying  to  such  consumers  a  commodity, 
current  accounts  or  claims  against  such  consumers  tor  such  services 
rendered  or  commodity  supplied  which  are  incapable  of  collection  by 
the  exercise  of  reasonable  diligence  are  included  under  the  name 
Uncollectible  Bills. 

10.  Income. 

Income  is  what  is  left  after  subtracting  revenue  deductions  from 
revenue.  Income  from  operating  properties  is  income  derived  from  the 
operation,  or  as  a  compensation  for  the  use,  of  properties  devoted  to 
the  undertakings  for  which  the  accounting  company  is  organized. 
Income  from  non-operating  properties  is  income  derived  from  properties 
not  devoted  to  the  undertakings  for  which  the  accounting  company 
is  organized;  also  trom  properties  not  belonging  to  the  accounting 
company,  but  in  which  it  has  an  interest  through  ownership  of  stocks, 
bonds,  or  otherwise.  Operating  income  applicable  to  corporate  and 
leased  properties  is  that  income  arising  from  any  class  of  operations 
which  is  available  to  pay  a  return  in  one  form  or  another  upon  capital 
employed  in  that  class  of  operations.    Income  applicable  to  corporate 


INCOME    ACCOUNTS  51 

property  is  that  income  which  is  available  to  pay  a  return  in  one  form 
or  another  on  capital  owned  by  the  accounting  company.  It  is  the 
operating  income  applicable  to  corporate  and  leased  properties  less 
rentals  for  the  use  of  capital  not  owned.  Gross  income  is  income  from 
all  sources  whatsoever.  It  might  also  be  called  total  net  revenue. 
Gross  corporate  income  is  that  income  applicable  to  corporate  prop- 
erties, that  is,  gross  income  less  rentals  for  capital  not  owned.  Net 
income  is  that  amount  left  after  all  contractual  or  compulsory  deduc- 
tions have  been  made  from  gross  income  except  such  sinking  fund 
accruals  as  are  required  to  be  temporarily  reserved. 

11.    Delayed  Income  Items. 

Delayed  items  are  those  representing  transactions  which  occurred 
prior  to  the  period  covered  by  the  income  account,  but  which  were 
not  recorded  currently.  Such  items  may  be  charged  or  credited  to 
the  appropriate  income  account  for  the  fiscal  period  in  which  the 
transactions  are  actually  recorded.  If,  however,  the  amount  of  such 
items  is  relatively  so  large  that  its  inclusion  in  the  income  account 
for  a  single  year  would  result  in  a  seriously  abnormal  income  state- 
ment, and  no  provision  has  been  made  through  accruals  to  reserves 
or  suspense  accounts  for  anticipating  such  transactions,  the  account- 
ing company  may  distribute  the  amount,  or  any  part  thereof,  to 
Profit  and  Loss. 


52  INCOME   ACCOUNTS 


TEXT  PERTAINING  TO  INCOME  ACCOUNTS 

401.  Operating  Revenues. 

Under  this  head  shall  be  shown  the  total  revenues  of  the  accounting 
company  from  water  €perations  during  the  period  covered  by  the  in- 
come account.  (For  the  primary  operating  revenue  accounts  see 
pages  64  to  66). 

402.  Operating  Expenses. 

Under  this  head  shall  be  shown  the  total  expenses  of  the  accounting 
company  for  water  operations  during  the  period  covered  by  the  in- 
come account.  (For  the  primary  operating  expense  accounts  see  pages 
70  to  100). 

403.  Uncollectible  Bills. 

This  account  shall  include  charges  for  accounts  due  from  'consumers 
or  customers  which,  after  a  reasonably  diligent  effort  to  collect,  have 
proved  impracticable  of  collection.  If  accounts  which  have  been  so 
written  off  are  afterwards  collected,  the  amount  received  should  be 
credited  to  this  account. 

Note  A. — Charges  to  this  account  may  be  made  on  the  basis  of  the  estimated 
average  loss  due  to  uncollectible  accounts  in  which  case  the  concurrent  credit  shall 
be  to  a  special  account  under  balance  sheet  account  No.  257,  "Miscellaneous  Re- 
serves." To  the  reserve  thus  estabHshed  shall  be  charged  such  accounts  as  are 
determined  to  be  uncollectible.  When  charges  for  uncollectible  accounts  are  thus 
made  by  estimate,  the  estimate  shall  be  adjusted  at  the  end  of  each  fiscal  year  to 
conform  to  the  experience  of  the  accounting  company  as  determined  by  analysis 
of  its  accounts  receivable. 

Note  B. — In  its  annual  report  to  the  regulatory  commission  the  accounting 
company  may  be  required  to  state  the  rule  by  which  is  determined  what  accounts 
are  to  be  charged  off  as  uncollectible. 

404.  Taxes. 

This  account  shall  include  the  amount  of  taxes  applicable  to  the 
water  operations  of  the  accounting  company  during  the  period  for 
which  the  income  account  is  stated. 

Separate  account  shall  be  kept  of  the  taxes  applicable  to  water 
operations  and  to  operations  other  than  water,  as  well  as  to  non- 
operating  revenues,  if  the  accounting  company  has  such  other  opera- 
tions or  non-operating  revenues.  When  taxes  are  levied  on  property 
used  in  two  or  more  different  classes  of  operations  in  such  a  way  that 
the  amount  applicable  to  each  class  is  not  definitely  stated,  the  total 
amount  of  the  levy  shall  be  apportioned  by  the  accounting  company 


INCOME   ACCOUNTS  53 

on  some  fair  basis  between  the  two  or  more  classes  of  operations.  In 
annual  reports  to  the  regulatory  commission  the  basis  of  such  appor- 
tionment shall  be  stated. 

The  tax  accounts  shall  be  charged  at  regular  accounting  intervals 
and  the  "Tax  Liability  Account"  (see  note  under  account  No.  231, 
"Taxes  Accrued")  concurrently  credited  with  the  period's  proportion 
of  taxes  applicable  to  the  operations  covered  by  each  account.  If  the 
exact  amounts  of  the  annual  taxes  are  not  known,  they  shall  be  esti- 
mated and  a  due  share  of  the  estimated  amounts  shall  be  charged  for 
each  accounting  period.  From  time  to  time  during  the  year  as  the 
actual  tax  levies  become  known  the  periodic  charges  shall  be  adjusted 
so  as  to  include  as  nearly  as  possible  the  total  amount  of  the  taxes  in 
the  period  to  which  they  apply. 

Note  A. — Taxes  on  property  leased  should  be  charged  to  the  appropriate  tax 
account  by  the  party  which  under  the  terms  of  the  lease  contract  actually  pays  such 
taxes.  If  by  the  provisions  of  the  lease  the  party  actually  paying  the  taxes  is  reim- 
bursed by  the  other  party  to  the  lease,  the  amount  of  such  reimbursement  shall, 
when  the  taxes  are  paid  in  the  first  instance  by  the  lessor,  be  credited  to  the  appro- 
priate rent  revenue  account  of  the  lessor  and  charged  by  the  lessee  to  the  appro- 
priate rent  deduction  account;  when  the  taxes  are  paid  in  the  first  instance  by  the 
lessee,  the  amount  of  the  reimbursement  shall  be  credited  to  the  appropriate  rent 
deduction  account  of  the  lessee  and  charged  by  the  lessor  to  the  appropriate  rent 
revenue  account. 

Note  B. — The  tax  accounts  must  not  include  any  fees  or  charges  sometimes 
called  taxes,  such  as  water  taxes,  drainage  taxes,  or  fire  taxes,  which  are  payments 
for  some  specific  service  rendered  by  the  government. 


411.    Rent  for  Lease  of  other  Water  Plant. 

This  account  shall  include  all  amounts  accrued  against  the  account- 
ing company  for  rent  of  any  water  plant  constituting  a  distinct  operat- 
ing unit,  such  as  a  production  plant  or  distribution  system,  under  a 
lease  giving  exclusive  possession  to  the  lessee. 


414.     Amortization  of  Limited  Term  Land  Rights. 

When  the  right  to  use  land  for  a  limited  term  has  been  acquired 
under  a  contract  by  which  the  consideration  is  a  single  immediate  pay- 
ment instead  of  a  series  of  periodic  rentals  during  the  term  for  which 
the  land  is  transferred,  this  account  shall  include  an  amount  sufficient 
to  cover  the  portion  of  the  life  of  such  limited  interest  in  land  as  has 
expired  during  the  accounting  period.  The  amount  charged  to  this 
account  shall  be  concurrently  credited  to  the  fixed  capital  account  to 
which  the  cost  of  acquiring  such  an  interest  in  land  was  originally 
charged. 


54  INCOME   ACCOUNTS 

415.    Rent  Accrued  from  Lease  of  Water  Plant — Cr. 

This  account  shall  include  all  amounts  accruing  to  the  accounting 

company  as  rental  for  its  water  plant  or  any  part  thereof  constituting 

a  distinct  operating  unit,  such  as  a  production  plant  or  distribution 

system,  under  a  lease  giving  exclusive  possession  to  the  lessee. 

Note. — Rentals  received  for  the  use  of  comparatively  small  portions  of  plant 
or  equipment,  not  constituting  a  distinct  operating  unit,  the  cost  of  whch  is  carried 
in  v/ater  fixed  capital  accounts,  and  the  cost  of  maintaining  which  is  ordinarily 
borne  by  the  owner,  shall  not  be  credited  to  this  account  but  to  operating  revenue 
accotmt  No.  614,  Miscellaneous  Operating  Revenues,  even  though  the  lessee  has 
exclusive  possession. 

421.  Miscellaneous  Rent  Revenues. 

This  account  shall  include  all  rent  revenues  accruing  to  the  account- 
ing company  from  properties  not  devoted  to  the  undertakings  for 
which  it  is  organized.  This  covers  such  revenues  as  rentals  from  real 
estate  not  used  in  operations. 

422.  Interest  on  Long  Term  Debt  Owned. 

This  account  shall  include  interest  accruing  to  the  accounting  com- 
pany upon  securities  of  other  companies  and  national,  state,  or  mu- 
nicipal governments.  Interest  accrued  shall  not  be  credited  to  this 
account  unless  its  payment  is  reasonably  assured ;  in  other  cases  credits 
to  this  account  shall  be  based  upon  the  interest  actually  collected. 

Note  A. — No  interest  upon  reacquired  securities  issued  or  assumed  by  the  ac- 
counting company  shall  be  credited  to  this  account. 

Note  B. — Interest  accrued  on  securities  of  other  companies  held  in  sinking  or 
other  special  funds  shall  not  be  credited  to  this  account,  but  to  account  No.  425, 
"Income  from  Special  Funds." 

423.  Miscellaneous  Interest  Revenues. 

This  account  shall  include  interest  accrued  to  the  accounting  com- 
pany on  loans,  notes,  and  advances,  special  deposits,  and  all  other 
interest  bearing  assets  except  funded  securities  and  current  funds 
employed  primarily  in  the  conduct  of  the  business  for  which  the  ac- 
counting company  is  organized.  Interest  accrued  shall  not  be  credited 
to  this  account  unless  its  payment  is  reasonably  assured;  in  other 
cases  credits  to  this  account  shall  be  based  upon  the  interest  actually 
collected. 

424.  Dividend  Revenues. 

This  account  shall  include  revenues  derived  by  the  accounting  com- 
pany from  dividends  on  stocks  of  other  companies  held  by  it.  Accruals 
of  guaranteed  dividends  may  be  included  in  this  account  if  their  pay- 
ment is  reasonably  assvired. 


INCOME   ACCOUNTS  55 

Note  A. — No  dividends  on  reacquired  securities  issued  or  assumed  by  the  ac- 
counting company  shall  be  credited  to  this  account. 

Note  B. — Dividend  revenues  from  securities  of  other  companies  held  in  sink- 
ing or  other  special  funds  shall  not  be  credited  to  this  account,  but  to  account  No. 
425,  "Income  from  Special  Funds." 

425.  Income  from  Special  Funds. 

This  account  shall  include  income  (whether  interest  or  dividends), 
accrued  on  cash,  securities  (not  issued  or  assumed  by  the  accounting 
company),  and  other  assets  held  in  sinking  and  other  special  funds. 

Note. — This  account  covers  all  income  from  investments  of  special  funds,  whether 
required  to  be  retained  in  the  fund  or  not.  If  such  income  is  required  to  be  retained 
in  the  fund  and  the  fund  required  to  be  represented  by  a  reser/e,  the  amount  of 
such  accretions  to  the  fund  shall  be  concurrently  credited  to  the  appropriate  reserve 
accoimt  and  charged  to  account  No.  441,  "Sinking  Fund  Appropriations,"  or  ac- 
count No.  443,  "Miscellaneous  Appropriations  of  Net  Income,"  as  may  be  appro- 
priate. 

426.  Miscellaneous  Non-Operating  Revenues. 

This  account  shall  include  all  revenues  accruing  to  the  accounting 
company  in  accordance  with  the  terms  of  any  contract  by  which  the 
company  is  entitled  to  participate  in  the  profits  resulting  from  the 
operations  of  others  and  all  other  non-operating  revenues  not  provided 
for  in  any  of  the  foregoing  accounts. 

Note. — "Profits  from  the  Operation  of  Others"  does  not  include  any  dividends 
on  stock.  Revenues  from  dividends  should  be  credited  to  account  No.  424,  "Divi- 
dend Revenues." 

427.  Non-Operating  Revenue  Deductions. 

This  account  shall  include  all  expenditures  necessary  to  receivmg  or 
collecting  non-operating  revenues  as  listed  under  the  following  sub- 
heads. If  desired,  each  sub-head  may  be  made  a  separate  ledger  ac- 
count. The  analysis  of  non-operating  revenue  deductions  by  such  sub- 
heads may  be  required  in  annual  reports  to  the  regulatory  commission. 

a.  Rent  Expense.  This  covers  all  expenses  arising  in  connection 
with  the  procuring  of  revenues  from  rented  properties  which  are  prop- 
erly credited  to  account  No.  421,  "Miscellaneous  Rent  Revenues," 
such  as  the  cost  of  negotiating  contracts,  advertising  for  tenants,  fees 
paid  conveyancers,  collectors'  commissions,  cost  of  enforcing  payment 
of  rent,  cost  of  ousting  tenants,  etc.  This  includes  expense  while  the 
property  is  idle  awaiting  occupant;  also  cost  of  maintenance  of  prop- 
erty when  such  cost  is  borne  by  the  owner.  Such  maintenance  does 
not  include  taxes. 

b.  Interest  Expense.  This  covers  all  expenses  in  connection  with 
the  collection  of  interest  upon  investments.  It  does  not  include  taxes 
on  such  investments. 


56  INCOME   ACCOUNTS 

c.  Dividend  Expense.  This  covers  all  expenses  in  connection  with 
the  collection  of  dividends  on  stocks  of  other  corporations;  also  all 
expenses  incurred,  as  in  the  investigation  of  the  affairs  of  the  corpora- 
tions whose  stocks  are  held,  whether  for  the  purpose  of  detecting  mis- 
management, or  for  the  purpose  of  inducing  the  declaration  of  divi- 
dends; and  all  expenses  connected  with  enforcing  payments  of  divi- 
dents  when  declared. 

d.  Miscellaneous  Non-Operating  Expense.  This  covers  the 
cost  of  negotiating  contracts  by  which  the  accounting  company  is 
entitled  to  share  in  profits  from  the  operation  of  others,  and  all  ex- 
penses of  collecting  the  accounting  company's  proportion  of  such 
profits  and  all  expenses  of  procuring  the  modification  or  dissolution  of 
any  such  contract;  also  all  other  non-operating  expenses  (as  expenses 
are  defined  under  "Income  Accounts — General  Instructions  and  Defi- 
nitions," Section  7,  Page  50)  which  are  not  provided  for  under  the 
foregoing  sub-heads. 

e.  Non- Operating  Taxes.  This  covers  all  taxes  accruing  upon 
non-operating  property,  revenue  from  which  is  .properly  credited  to 
accounts  Nos.  421  to  426,  inclusive,  and  all  other  taxes  not  upon 
property  but  assignable  to  non-operating  revenues. 

f.  Uncollectible  Non-Operating  Revenues.  This  covers  any 
non-operating  revenues  judged  by  the  accounting  company  to  be  un- 
collectible. 

431.  Interest  on  Long  Term  Debt. 

This  account  shall  include  all  interest  accrued  on  outstanding  long 
term  debt  issued  or  assumed  by  the  accounting  company,  the  Hability 
for  which  is  included  under  balance  sheet  account  No.  211,  "Long 
Term  Debt;"  also  interest  accrued  on  debenture  stocks  and  on  re- 
ceiver's certificates  which  mature  more  than  one  year  after  date  of 
issue.  This  account  does  not  include  interest  on  securities  held  by 
the  accounting  company  in  its  treasury,  in  sinking  or  other  special 
funds,  or  pledged  as  collateral. 

Note  A. — The  amount  charged  to  this  account  shall  be  concurrently  credited 
to  account  No.  232,  "Intecest  Accrued"  to  which  account  shall  be  debited  pay- 
ments made  on  account  of  interest. 

Note  B. — If  any  securities  issued  or  assumed  by  the  accounting  company  are 
held  in  a  sinking  or  other  special  fund,  the  interest  on  such  securities  shall  not  be 
charged  to  this  account. 

432.  Miscellaneous  Interest  Deductions. 

This  account  shall  include  interest  on  all  short-term  obligations  of 


INCOME   ACCOUNTS  57 

the  accounting  company  such  as  notes  or  loans  for  terms  of  less  than 
one  year,  unpaid  taxes,  consumers'  deposits,  or  other  accounts  payable, 
etc.  It  shall  also  include  interest  on  advances  from  affiliated  com- 
panies (see  balance  sheet  account  No.  241,  "Advances  from  Affiliated 
Companies");  and  interest  on  receiver's  certificates  which  mature  in 
one  year  or  less  after  date  of  issue. 

433.  Amortization  of  Debt  Discount  and  Expense. 

This  account  shall  include  for  any  fiscal  period  that  proportion  of 
the  unamortized  discount  and  expense  on  outstanding  debt  which  is 
applicable  to  the  period.  This  proportion  shall  be  determined  accord- 
ing to  a  rule  the  uniform  application  of  which  during  the  interval 
between  the  issue  and  maturity  of  any  debt,  will  completely  amortize 
or  wipe  out  the  discount  at  which  such  debt  was  issued  and  the  debt 
expense  connected  therewith. 

434.  Amortization  of  Premium  on  Debt — Cr. 

This  account  shall  include  for  any  fiscal  period  the  proportion  of  the 
premium  at  which  outstanding  debt  was  issued  which  was  applicable 
to  the  period.  This  proportion  shall  be  determined  according  to  a 
rule  the  uniform  application  of  which  during  the  interval  between  the 
issue  and  the  maturity  of  any  debt  will  completely  amortize  or  wipe 
out  the  premium  at  which  such  debt  was  issued. 

435.  Miscellaneous  Amortization  Chargeable  to  Income. 

This  account  shall  include  such  amounts  as  the  accounting  company 
may  be  required  to  charge  to  income  in  amortization  of  intangible 
book  value  or  other  items  carried  among  its  assets. 

436.  Miscellaneous  Deductions  from  Gross  Corporate  Income. 

This  account  shall  include  all  contractual  deductions  from  gross  cor- 
porate income  not  provided  for  in  any  of  the  foregoing  accounts. 
This  covers  unsecured  accruals  of  obligations  arising  under  contracts 
whereby  the  accounting  company  has  guaranteed  the  annual  or  more 
frequent  periodic  payment  of  money  or  performance  of  other  obliga- 
tion on  the  part  of  another  corporation  or  person  and  because  of  the 
default  of  such  other  corporation  or  person  the  liability  of  the  account- 
ing company  has  become  actual;  losses  resulting  from  the  operations 
of  others  whenever  in  accordance  with  the  terms  of  any  contract  the- 
accounting  company  is  bound  to  contribute  toward  reimbursement  of 
such  losses;  and  income  taxes  levied  upon  bondholders  and  assumed 
by  the  accounting  company. 


58  INCOME   ACCOUNTS 

441.     Sinking  Fund  Appropriations. 

This  account  shall  include  such  amounts  as  are  required  by  mort- 
gage provision  or  otherwise  to  be  charged  to  income  for  the  purpose  of 
retiring  or  reducing  the  bonded  or  other  obligations  of  the  accounting 
company.  It  shall  also  include  such  accretions  from  the  investments 
of  funds  specifically  set  aside  for  the  above  described  purpose  as  are 
required  to  be  added  to  a  sinking  fund  reserv^e  (see  also  account  No. 
425,  "Income  from  Special  Funds")- 

442     Dividend  Appropriations  of  Income. 

This  account  shall  include  amounts  declared  payable  as  dividends 
out  of  the  income  for  the  period  for  which  the  income  account  is 
stated  on  actually  outstanding  capital  stock  issued  or  assumed  by  the 
accounting  company. 

This  account  shall  be  subdivided  so  as  to  show  separately  the  divi- 
dends on  the  various  classes  of  capital  stock. 

If  the  dividend  is  not  payable  in  cash,  the  consideration  shall  be 
described  in  the  entry  with  sufficient  particularity  to  identify  it. 

Note. — This  account  shall  not  include  charges  for  dividends  on  capital  stock 
issued  or  assumed  by  the  accounting  company  and  owned  by  it  whether  held  in 
the  treasury,  in  special  deposits,  in  sinking  or  other  reserve  funds,  or  pledged  as 
collateral. 

443.     Miscellaneous  Appropriations  of  Net  Income. 

This  account  shall  include  all  appropriations  of  net  income  not  pro  • 
vJded  for  in  tlie  three  preceding  accounts.  This  covers  appropriations 
of  income  to  special  fund  reserves  (see  account  No.  425,  "Income 
from  Special  Funds"). 


PROFIT    AND    LOSS   ACCOUNTS  59 


♦  ♦♦ 


**♦ 


PROFIT  AND  LOSS  ACCOUNTS 
Standard  Form  of  Profit  and  Loss  Account 

Dr.  Or. 

Balance  at  beginning  of  the  fiscal  period 
Balance  transferred  from  income  account 

501.  Dividend  appropriations  of  surplus 

502.  Appropriations  to  reserves 

503.  Miscellaneous  credits  to  Profit  and  Loss 

504.  Miscellaneous  debits  to  Profit  and  Loss  *** 
Balance  at  the  end  of  the  fiscal  period 

General  Instructions  and  Definitions 

1.  Profit  and  Loss  Account  Defined. 

The  Profit  and  Loss  account  is  the  collective  title  for  a  small  group 
of  accounts  which  form  the  connecting  link  between  the  income  ac- 
count and  the  balance  sheet.  Its  principal  function  is  to  explain 
changes  in  the  corporate  surplus  or  deficit  during  a  given  fiscal  period 
as  affected,  first  by  the  net  result  of  all  the  transactions  reported  in 
the  income  account;  second,  by  appropriations  of  surplus  for  specific 
purposes  made  at  the  option  of  the  accounting  company;  and  third, 
by  special  and  unusual  transactions  or  adjustments  such  as  are  not 
regularly  recorded  in  the  income  account. 

2.  Delayed  Income  Items. 

Delayed  items  are  those  representing  transactions  which  occurred 
prior  to  the  period  covered  by  the  income  account,  but  which  were 
not  recorded  currently.  Such  items  may  be  charged  or  credited  to 
the  appropriate  income  account  for  the  fiscal  period,  in  which  the 
transactions  are  actually  recorded.  If,  however,  the  amount  of  such 
items  is  relatively  so  large  that  its  inclusion  in  the  income  account 
for  a  single  year  would  result  in  a  seriously  abnormal  income  state- 
ment, and  no  provision  has  been  made  through  accruals  to  reserves 
or  suspense  for  anticipating  such  transactions,  the  accounting  com- 
pany may  distribute  the  amount,  or  any  part  thereof,  to  Profit  and 
Loss. 

Note. — ^A  complete  anf.lysis  of  each  of  the  Profit  and  Loss  accounts  hereunder 
may  be  required  in  annual  reports  to  tlie  regulatory  commission. 


60  '  PROFIT   AND    LOSS   ACCOUNTS 


TEXT  PERTAINING  TO  PROFIT  AND  LOSS  ACCOUNTS 

501.  Dividend  Appropriations  of  Surplus. 

This  account  shall  include  amounts  declared  payable  as  dividends 
out  of  accumulated  surplus  on  actually  outstanding  capital  stock 
issued  or  assumed  by  the  accounting  company. 

This  account  shall  be  divided  so  as  to  show  separately  the  dividends 
on  the  various  classes  of  capital  stocks. 

If  a  dividend  is  not  payable  in  cash,  the  consideration  shall  be  de- 
scribed in  the  entry  with  sufficient  particularity  to  identify  it. 

Note. — ^This  account  shall  not  include  charges  for  dividends  on  capital  stock 
issued  or  assumed  by  the  accounting  company  and  owned  by  it,  whether  held  in 
the  treasury,  in  special  deposits,  in  sinking  or  other  funds,  or  pledged  as  collateral. 

502.  Appropriations  to  Reserves, 

This  account  shall  include  appropriations  from  surplus  for  sinking 
fund  and  other  reserves  and  allotments  of  surplus  or  payment  of 
definite  amounts  from  surplus  into  sinking  fund  and  other  reserves 
under  the  terms  of  mortgages,  deeds  of  trust,  or  other  contracts; 
amounts  estimated  to  be  necessary  to  bring  the  retirement  reserve  up 
to  an  adequate  figure;  and  such  other  appropriations  of  surplus  to  be 
set  aside  in  special  reserve  accounts  as  the  accounting  company  may 
have  the  right  or  duty  to  make. 

503.  Miscellaneous  Credits  to  Profit  and  Loss. 

This  account  shall  include  all  credits  affecting  the  accounting  com- 
pany's surplus  or  deficit  and  not  elsewhere  provided  for,  such  as : 

Adjustments  or  cancellation  of  balance  sheet  accounts. 

Cancellation  of  balance  sheet  accounts  representing  unclaimed  wages 
and  vouchered  accounts  written  off  because  of  the  accounting  com- 
pany's inability  to  locate  the  creditor. 

Profit  derived  from  the  sale  of  miscellaneous  investments. 

Credits  resulting  from  adjustments  required  to  bring  to  par  securities 
issued  or  assumed  by  the  accounting  company  and  reacquired  at  a  cost 
less  than  par  value. 

Premiums  on  capital  stock  at  the  time  of  its  reacquirement.  (See 
"Balance  Sheet  Accounts— General  Instructions  and  Definitions," 
Section  11,  page  5). 

Unreleased  premiums  on  funded  debt  reacquired  before  maturity. 
(See  "Balance  Sheet  Accounts— General  Instructions  and  Definitions," 
Section  12,  page  7). 


PROFIT  AND    LOSS   ACCOUNTS  61 

Note. — If  old  accounts  are  collected  which  have  been  previously  written  off  as 
uncollectible,  the  amount  received  should  be  credited  to  the  account  which  was 
originally  charged  when  the  amount  in  question  was  written  off,  and  not  to  "Profit 
and  Loss." 

504.    Miscellaneous  Debits  to  Profit  and  Loss. 

This  account  shall  include  all  debits  affecting  the  accounting  com- 
pany's surplus  or  deficit  and  not  elsewhere  provided  for,  such  as : 

Adjustments  or  cancellation  of  balance  sheet  accounts. 

Losses  or  deficits  not  properly  chargeable  to  income  and  for  which 
no  reserve  has  been  provided. 

Losses  resulting  from  the  sale  of  miscellaneous  investments,  and 
debits  resulting  from  adjustments  required  to  bring  to  par  securities 
issued  or  assumed  by  the  accounting  company  and  reacquired  at  a  cost 
exceeding  the  par  value. 

Unextinguished  discounts  on  funded  debt  reacquired  before  ma- 
turity. 

Donations  to  charitable  institutions  and  organizations  for  promot- 
ing social  welfare. 

Penalties  and  fines  for  violations  of  law. 


62  OPERATING    REVENUE   ACCOUNTS 


OPERATING  REVENUE  ACCOUNTS 

Sales  of  Water: 

601.  Metered  sales  to  general  consumers 

602.  Flat  rate  sales  to  general  consumers 

603.  Flat  rate  sales  to  irrigation  customers 

604.  Other  water  utilities 

605.  Municipal  hydrants 

606.  Miscellaneous  municipal  sales 

607.  Forfeited  discounts 

Miscellaneous  Revenues: 

611.  Commissions  on  others'  water 

612.  Rent  from  water  appliances 

613.  Merchandise  and  jobbing 

614.  Miscellaneous  operating  revenues 

General  Instructions  and  Definitions 

1.  Operating  Revenue  Accounts  Defined. 

Operating  revenue  accounts  are  those  in  which  are  recorded  the 
amount  which  the  accounting  company  receives  or  becomes  lawfully 
entitled  to  recover  for  services  rendered,  for  products  or  merchandise 
sold,  as  a  return  on  property  used  in  the  company's  own  operations, 
and  as  interest  on  current  funds,  such  as  daily  bank  balances. 

2.  Basis  of  Credits  to  Operating  Revenue  Accounts. 

Credits  to  the  various  revenue  accounts  shall  be  made  upon  the 
basis  of  bills  rendered  or  of  gross  prices.  Discounts  for  prompt  pay- 
ment, corrections  of  overcharges,  over-collections  theretofore  credited 
and  afterward  corrected,  authorized  abatements  and  allowances  and 
other  corrections  and  deductions  shall  be  charged  to  the  revenue 
account  to  which  they  relate. 

Note  A. — If  a  water  corporation  desires  to  credit  its  revenue  accounts  upon  the 
basis  of  net  price  charged  to  consumers,  it  may  be  allowed  to  do  so  upon  filing  with 
the  regulatory  commission  a  notice  of  its  intention.  In  such  case,  all  discounts 
forfeited  or  penalties  charged  for  delayed  payments  shall  be  credited  to  the  revenue 
accoimts  involved  and  kept  in  such  form  as  to  permit  their  being  separately  re- 
ported. 

Note  B. — If  the  accoimting  company  sells  all  or  part  of  its  water  through  an 
agent  imder  contract  by  which  the  agent  pays  distribution  and  other  expenses  and 
turns  over  to  the  accounting  company  the  amount  collected  from  sales  of  water 
less  his  agent's  commission,  the  accoimting  company  should  credit  its  revenue 
accoimts  with  the  full  amount  collected  by  its  agent  and  charge  the  amount  of  the 
agent's  commission  to  operating  expense  accoimt  No.  761 — 4,  "Collecting."  The 
agent  should  credit  the  amount  of  the  commission  received  to  operating  revenue 
account  No.  611,  "Commissions  on  Others'  Water,"  and  credit  the  remainder  of 
the  revenue  from  water  sold  on  commission  to  the  accoimt  of  the  company  supply- 
ing such  water. 


OPERATING   REVENUE   ACCOUNTS  63 

3.  Delayed  Items. 

Delayed  items  are  those  representing  transactions  which  occurred 
prior  to  the  period  for  which  a  revenue  account  is  stated,  but  which 
were  not  recorded  currently.  Such  items  may  be  charged  or  credited 
to  the  appropriate  revenue  account  for  the  fiscal  period  in  which  the 
transactions  are  actually  recorded.  If,  however,  the  amount  of  sucl:. 
items  is  relatively  so  large  that  its  inclusion  in  the  revenue  accounts 
for  a  single  year  would  result  in  a  seriously  abnormal  income  state- 
ment and  no  provision  has  been  made  through  accruals  to  reserves 
or  suspense  accounts  for  anticipating  such  transactions,  the  account- 
ing company  may  distribute  the  amount  or  any  part  thereof  to  Profit 
and  Loss. 

4.  No  Revenue  from  Water  Used  in  Operations  or  Supplied 

without  Direct  Charge. 

If  the  accounting  company  desires  to  charge  its  various  depart- 
mental accounts  with  water  used  in  such  departments,  the  value  of 
such  water  shall  not  be  credited  to  revenue,  but  to  the  operating  ex- 
pense account  749,  "Production  Expenses  Transferred — Cr."  Simi- 
larly, if  water  is  supplied  without  direct  charge  in  accordance  with 
the  terms  of  a  municipal  or  other  contract  calling  for  limited  "free" 
service,  in  accordance  with  franchise  requirements,  as  compensation 
for  the  services  of  employees,  etc.,  and  it  is  desired  to  charge  the 
value  of  the  water  so  furnished  to  appropriate  operating  expense 
accounts,  the  concurrent  credit  shall  be,  not  to  a  revenue  account, 
but  to  account  749,  "Production  Expenses  Transferred — Cr." 


64  OPERATING  REVENUE  ACCOUNTS 


TEXT  PERTAINING  TO  OPERATING  REVENUE 

ACCOUNTS 

601.  Metered  Sales  to  General  Consumers. 

This  account  shall  include  all  revenues  received  for  measured  water 

supplied  for  residential,  commercial  and  industrial  purposes  where  the 

total  receipt  is  dependent  upon  quantity  of  water  supplied  except 

revenues  from  the  sal^  of  water  to  municipal  corporations  and  other 

governmental  agencies  at  rates  not  available  to  non-municipal  users. 

NoTE-^This  account  shall  be  subdivided  to  show  the  sales  of  water  for  resi- 
dential, commercial,  and  industrial  purposes,  by  tariff  schedules,  unless  otherwise 
authorized  by  the  regulatory  body. 

602.  Flat-Rate  Sales  to  General  Consumers. 

This  account  shall  include  all  revenues  received  for  water  supplied 
at  flat-rates  per  year,  per  night,  per  hour,  or  other  time  unit  or  on 
any  basis  independent  of  the  quantity  of  water  supplied  except  revenues 
from  the  sales  of  water  to  municipal  corporations  and  other  govern- 
mental agencies  at  rates  not  available  to  non-municipal  users. 

Note. — ^This  account  shall  be  subdivided  to  show  the  sales  of  water  for  residential, 
commercial,  and  industrial  purposes,  by  tariff  schedules,  unless  otherwise  authorized 
by  the  regulatory  body. 

603.  Flat  Rate  Sales  to  Irrigation  Consumers. 

Credit  to  this  account  all  earnings  from  the  sale  of  water  for  irriga- 
tion purposes  at  rates  specially  made,  in  any  manner  applied  to  units 
of  consumption. 

604.  Other  Water  Utilities. 

This  account  shall  include  all  revenues  derived  from  water  sold  to 
other  water  utilities  to  be  by  them  distributed  through  their  own 
system  to  consumers.  If  any  portion  of  such  water  is  incidentally 
consumed  by  such  utilities  for  their  own  benefit,  it  shall  be  included 
herein  if  not  separately  measured  or  if  included  under  the  same  con- 
tract with  that  which  is  distributed  by  them  to  consumers. 

605.  Municipal  Hydrants. 

This  account  shall  include  all  revenue  from  the  municipality  for 
hydrant  rental.  Where  the  hydrant  rental  paid  by  the  municipality 
includes  the  use  of  water  for  street  sprinkling  and  flushing  purposes 
and  such  water  is  not  being  separately  metered,  the  total  revenue 
collected  under  the  contract  for  hydrant  rental  shall  be  credited  to 
this  account. 


OPERATING   REVENUE   ACCOUNTS  65 

606.    Miscellaneous  Municipal  Sales. 

This  account  shall  include  all  revenues  derived  from  water  supplied 
to  municipal  corporations  at  special  rates  not  available  to  non-munici- 
pal consumers;  also  all  revenues  from  water  supplied  under  special 
contract  with  federal,  state,  or  county  governments. 

610.  Forfeited  Discounts. 

Where  permitted  by  the  regulatory  body  revenues  from  forfeited 
discounts  for  prompt  payment  should  be  included  in  this  account. 

Note — Where  required,  sub-divisions  of  this  account  appertaining  to  the  differ- 
ent revenue  accounts,  will  be  kept. 

MISCELLANEOUS  REVENUES 

611.  Commissions  on  Others'  Water. 

This  account  shall  include  all  revenues  accruing  to  the  accounting 
company  for  distributing  water  of  other  companies  over  its  distribu- 
tion system  and  selling  the  same,  and  for  all  other  services  performed 
in  connection  therewith.  (See  Operating  Revenue  Accounts — General 
Instructions  and  Definitions). 

612.  Rent  from  Water  Appliances. 

This  account  shall  include  all  revenues  derived  from  letting  of  water 
motors,  meters  and  other  water  apparatus  and  appliances.  Where  the 
contract  of  letting  names  only  a  single  consideration  for  both  the 
letting  and  the  maintenance  of  the  appliance  so  let,  the  entire  revenue 
shall  be  included  in  this  account. 

613.  Merchandise  and  Jobbing. 

This  account  shall  include  all  revenues  derived  from  the  sale  of 
water  merchandise  and  water  jobbing.  To  this  account  shall  be 
charged  the  cost  to  the  accounting  company  of  such  merchandise 
sold  including  transportation  costs,  and  the  cost  of  labor  employed  in 
merchandise  and  jobbing  work  so  far  as  it  is  the  practice  of  the  ac- 
counting company  to  segregate  such  labor  cost;  also  discounts  and 
allowances  made  in  connection  with  settlement  of  bills  for  merchandise 
and  jobbing. 

To  this  account  shall  also  be  credited  the  profit  or  commission 

accruing  to  the  accounting  company  on  all  piping  and  jobbing  work 

performed  by  it  as  agent  under  contracts  whereunder  it  undertakes  to 

do  jobbing  work  for  another  for  a  stipulated  profit  or  commission. 

Note  A. — ^The  accounting  company  should  keep  this  a(icount  in  such  detail  as 
to  enable  it  to  analyze  the  credits  and  debits  in  its  annual  report. 


66  OPERATING   REVENUE   ACCOUNTS 

Note  B. — ^This  account  does  not  include  receipts  from  the  sale  of  superseded 
equipment  or  of  junk  or  other  scrap  or  salvage.  Such  receipts  should  be  credited 
to  the  account  to  which  the  cost  of  the  superseded  equipment  is  charged  or  (in  the 
case  of  the  sale  of  jimk,  etc.)  to  account  No.  781,  "Undistributed  General  Expenses") 
or  the  appropriate  subdivision  thereof. 

Note  C. — Loss  from  such  operation  shall  show  as  a  debit  balance  in  the  account. 

Note  D. — If  the  accotmting  company  is  engaged  in  merchandising  or  jobbing 
primarily  for  direct  profit  rather  than  for  stimulating  the  consumption  of  water, 
such  merchandising  and  jobbing  may  be  organized  and  accounted  for  as  a  distinct 
department  of  the  accoimting  company  co-ordinate  with  the  water  department. 

Note  E. — ^The  regulatory  body  may,  if  it  so  desires,  require  that  this  account 
be  treated  as  a  non-operating  revenue  accoimt.  ' 

^14.    Miscellaneous  Operating  Revenues. 

This  account  shall  include  all  revenues  derived  from  water  opera- 
tions not  includible  in  any  of  the  foregoing  accounts.  This  covers 
such  items  as  profit  on  the  sale  of  materials  and  supplies  not  ordinarily 
purchased  for  resale,  sale  of  overflow  water,  interest  on  daily  bank 
balances,  etc. 


OPERATING    EXPENSE   ACCOUNTS  67 


OPERATING  EXPENSE  ACCOUNTS 

700.    SOURCE  OP  WATER  SUPPLY  EXPENSES 

701.  Superintendence  and  Labor 

701-1     Superintendence 
701-2    Operating  Labor 

702.  Operating  Supplies  and  Expenses 

703.  Maintenance  of  Source  of  Supply 

703-1     Repairs  to  Water  Supply  Buildings  and  Fixtures 
703-2    Repairs  to  Surface  Source  of  Supply  Facilities 
703-3    Repairs  to  Ground  Source  of  Water  Supply 

704.  Water  Purchased  for  Resale 

710.    STEAM  POWER  PUMPING 

711.  Superintendence  and  Labor 

711-1     Superintendence 
711-2    Boiler  Labor 
711-3    Pumping  Labor 
711-4    Miscellaneous  Labor 

712.  Steam  Pumping  Supplies  and  Expenses 

712-1    Fuel 

712-2    Water  for  Steam 

712-3    Lubricants- 

712-4    Miscellaneous  Steam  Power  Pumping  Station  Supplies  and  Expenses 

713.  Maintenance  of  Steam  Pumping  Plant 

713-1     Maintenance  of  Steam  Power  Ptmiping  Buildings  and  Fixtures 

713-2    Maintenance  of  Boilers  and  Accessories 

713-3     Maintenance  of  Steam  Power  Pumping  Equipment 

713-4    Maintenance  of  Miscellaneous  Steam  Pumping  Plant  Equipment 

714.  Steam  from  other  Sources 

715.  Steam  Generated — Apportionment  Account 

720.    ELECTRIC  POWER  PUMPING 

721.  Labor  and  Superintendence 

721-1     Superintendence 
721-2    Pimiping  Labor 
721-3     Miscellaneous  Labor 

722.  Electric  Pumping  Supplies  and  Expenses 

722-3    Lubricants 

722-4    Miscellaneous  Electric  Power  Pumping  Supplies  and  Expenses 

723.  Maintenance 

723-1     Maintenance  of  Electric  Pimiping  Buildings  and  Fixtures 

723-2    Maintenance  of  Electric  Pumping  Equipment 

723-3    Maintenance  of  Miscellaneous  Pumping  Station  Equipment 

724.  Power  Purchased  cr  Transferred  from  other  Departments 


68  OPERATING   EXPENSE   ACCOUNTS 

730.    GAS  OR  OIL  POWER  PUMPING 

731.    Labor  and  Superintendence 

731-1     Superintendence 

731-2    Producer  Labor 

731-3    Pumping  Labor 

731-4    Miscellaneous  Pumping  Labor 
732     Gas  or  Oil  Pimiping  Supplies  and  Expenses 

732-1    Fuel 

732-2    Water 

732-3    Lubricants 

732-4    Miscellaneous  Gas  or  Oil  Pumping  Station  Supplies  and  Expenses 

733.  Maintenance 

733-1     Maintenance  of  Gas  or  Oil  Power  Pumping  Buildings  and  Fixtures 
733-2    Maintenance  of  Gas  Producer  and  Auxiliary  Equipment 
733-3    Maintenance  of  Gas  or  Oil  Power  Pumping  Equipment 
733-4    Maintenance  of  Miscellaneous  Gas  or  Oil  Power  Pumping  Station 
Equipment 

734.  Power  Gas  Purchased  or  Transferred  from  other  Departments 

H-730.    HYDRAULIC  POWER  PUMPING 

H-731.    Superintendence  and  Labor 
H-731-1    Superintendence 
H-731-2    Hydraulic  Labor 
H-731-3    Pump  Labor 
H-731-4    Miscellaneous  Labor 
H-732.    Hydraulic  Pimiping  Supplies  and  Expenses 
H-732-3.    Lubricants 

H-732-4.    Miscellaneous  Pimiping  Station  Supplies  and  Expenses 
H-733.    Maintenance 

H-733-1.    Maintenance  of  Dams,  Canals,  and  Flumes  and  Buildings  and 

l^ixtures 
H-733-2.     Maintenance  of  Turbines  and  Water  Wheels 
H-733-3.     Maintenance  of  Hydraulic  Power  Pumping  Equipment 
H-733-4.    Maintenance  of  Miscellaneous  Hydraulic  Power  Pumping 
Equipment 
H-734.    Hydraulic  Power  Purchased 

740.    PURIFICATION 

741.  Superintendence  and  Labor  • 

741-1.    Superintendence 
741-2.    Purification  Labor 

742.  Purification  Supplies  and  Expenses 

743.  Maintenance 

743-1.     Maintenance  of  Purification  Buildings  and  Fixtures 
743-2.     Maintenance  of  Purification  Equipment 

748.  Duplicate  Production  Charges — Cr. 

749.  Production  Expenses  Transferred- — Cr. 

750.     TRANSMISSION  AND  DISTRIBUTION 
761.     Labor,  Supplies  and  Expenses 


OPERATING   EXPENSE  ACCOUNTS  69 

751-1.     Superintendence 

751-2.     Storage  Reservoir,  Tank  and  Standpipe  Labor 

751-3.     Maps  and  Records 

751-4.     Inspecting  and  Testing  Meters  and  Measuring  Devices 

751-5.     Removing  and  Resetting  Meters  and  Measuring  Devices 

751-6.     Inspecting  Customers'  Installations 

751-7.     Other  Transmission  and  Distribution  Operating  Labor 

752.  Miscellaneous  Distribution  Supplies  and  Expenses 

753.  Maintenance 

753-1.  Maintenance  of  Transmission  and  Distribution  Buildings  and  Fix- 
tures 

753-2.  Maintenance  of  Transmission  Mains 

753-3.  Maintenance  of  Storage  Reservoir  Tanks  and  Standpipes 

753-4.  Maintenance  of  Distribution  Mains 

753-5.  Maintenance  of  Services 

753-6.  Maintenance  of  Meters 

753-7.  Maintenance  of  Hydrants 

753-8.  Maintenance  of  Fountains  and  Troughs 

760.    COMMERCIAL  AND  NEW  BUSINESS 

761.     Commercial 

761-1.     Superintendence 

761-2.     Meter  Reading 

761-3.    Consumers'  Accounts 

761-4.     Collecting 

761-5.    Contract  Department 

761-6.     Miscellaneous  Commercial  Department  Expenses 
770.     New  Business  Expenses 

770-1.     New  Business — Salaries 

770-2.    New  Business — Supplies  and  Expenses 

780.    GENERAL  AND  MISCELLANEOUS  EXPENSES 

781.    Undistributed  General  Expenses 

781-  1.    General  Office  Salaries 

781-11.     Administrative  Salaries 

781-12.    Other  General  Office  Salaries 

781-  2.     Miscellaneous  General  Expenses 

781-21.     General  Office  Supplies  and  Expenses 

781-22.     General  Stationery  and  Printing 

781-23.     Maintenance  of  General  Structures 

781-24.     Law  Expenses 

781-25.    Insurance 

781-26.     Store  Expenses 

781-27.     Transportation  Expenses 

781-28.     Other  Miscellaneous  General  Expenses 

781-29.     Undistributed  Adjustments 
782:     Retirement  Expense 
783.     Injuries  and  Damages 

783-  1.    Claim  Depaitment  Expenses 

783-  2.    Medical  Expenses 


70  OPERATING   EXPENSE   ACCOUNTS 

783-  3.    Injuries  to  Employees 

783-  4.     Other  Personal  Injuries  and  Property  Damage 

783-  5.     Miscellaneous  Accident  Expenses 

784.  Regulatory  Commission  Expenses 

785.  Relief  and  Welfare  Work 

785-  1.    Employees'  Welfare  Department 
785-  2.     Pensions 

786.  Franchise  Requirements 

787.  Amortization  of  Franchises 

788.  Water  Expenses  Transferred — Cr. 

789.  Joint  Operating  Expenses — Cr. 

790.  Duplicate  Miscellaneous  Charges — Cr. 

OPERATINQ  EXPENSE  ACCOUNTS 
General  Instructions  and  Definitions 

1.  Operating  Expenses  Defined. 

The  term  operating  expenses  as  used  in  this  classification  means 
such  expenses  as  are  necessary  to  the  maintenance  of  the  corporate 
organization,  the  rendering  of  service  required  or  authorized  by  law, 
the  sale  of  merchandise,  the  production  (including  herein  capital  con- 
sumed), and  disposition  of  commodities  produced,  and  the  collection 
of  the  revenues  therefor.  Expenses  directly  incident  to  the  collection 
of  non-operating  revenues  and  the  maintenance  of  property  from 
which  non-operating  revenues  are  derived  are  excluded  from  operat- 
ing expenses. 

2.  Definitions  of  Certain  Terms  Used  in  Connection  with  Ex- 

pense Accounts. 

Except  where  some  other  meaning  is  clearly  specified  in  the  defini- 
tions of  the  accounts,  the  following  words,  wherever  used  hereunder 
have  the  meanings  below  stated. 

Cost  means  cash  or  money  cost,  and  not  price  based  on  a  term  of 
credit. 

Labor  means  human  services  of  whatever  character. 

Cost  of  labor  includes  wages,  salaries,  and  fees  paid  to  persons  for 
their  services. 

Cost  of  materials  and  supplies  includes  all  specifically  assignable 
transportation  charges  incurred  in  obtaining  the  delivery  of  such  ma- 
terials and  supplies  upon  the  premises  of  the  purchaser,  such  as  pack- 
ing, drayage,  freight,  insurance,  customs  duties,  commissions,  etc., 
and  cost  of  any  special  tests  made  thereon  prior  to  their  acceptance; 
and  in  case  the  accounting  person  or  corporation  desires,  it  may  in- 
clude a  suitable  proportion  of  store  expenses  (when  the  materials  and 


OPERATING    EXPENSE   ACCOUNTS  Tl 

nipplies  are  passed  through  stores)  and  the  cost  of  further  transporta- 
tion to  the  place  of  consumption,  and  a  suitable  proportion  of  the  ex- 
penses of  the  purchasing  department,  in  which  case  a  corresponding 
credit  shall  be  made  to  the  suitable  expense  account  as  hereinafter 
provided. 

Cost  of  repairs,  when  made  by  the  accounting  person  or  corporation, 
includes  cost  of  labor  expended  and  material  consumed,  and  incidental 
expenses  such  as  carfare,  permits,  inspection,  etc.,  less  salvage,  if  any. 

Current  maintenance  includes  such  expenses  necessary  to  maintain 
the  tangible  property  in  a  state  of  operating  efficiency  as  do  not  result 
in  a  substantial  change  of  identity  in  any  particular  unit  of  property. 
It  includes  the  cost  of  minor  replacements  of  small  parts  commonly 
called  the  cost  of  repairs,  but  it  does  not  include  the  cost  of  replacing 
individual  structures,  facilities  or  units  of  equipment  or  important 
sections  of  continuous  structures  such  as  water  main.  Current  main- 
tenance costs  are  chargeable  to  operating  expenses  and  wherever  the 
word  "maintenance"  is  used  in  the  definition  of  an  operating  expense 
account  curi'ent  maintenance  is  to  be  understood.  The  cost  of  replac- 
ing the  larger  units  is  chargeable  to  fixed  capital  from  which  the  cost 
of  the  property  replaced  must  be  deducted. 

Note. — It  is  not  required  that  the  transportation  element  of  cost  shall  be  assigned 
with  a  greater  degree  of  accuracy  than  to  the  nearest  cent  per  imit  of  material  or 
supply.  Where  a  single  transportation  item  covers  a  multitude  of  things  the  portion 
of  the  expense  not  assigned  to  specific  things  should  be  charged  to  the  same  account 
that  store  expenses  are  charged  to. 

3.  Unaudited  Bills  and  Vouchers. 

When  bills  covering  operating  expense  items  are  not  received  in 
time  for  audit,  and  when  vouchers  are  not  made  in  time  for  inclusion 
in  the  operating  accounts  for  the  month  in  which  the  transactions 
occur,  the  items  may  be  estimated  and  in  such  form  charged  or  credited 
to  operating  accounts,  and  credited  or  charged  to  operating  reserves, 
the  necessary  adjustments  being  made  later  when  the  bills  and  vouchers 
are  taken  into  the  accounts.  »,^ 

4.  Delayed  Items. 

Delayed  items  are  those  representing  transactions  which  occurred 
prior  to  the  period  covered  by  the  income  account,  but  which  were- 
not  recorded  currently.  Such  items  may  be  charged  or  credited  to 
the  appropriate  expense  account  for  the  fiscal  period  in  which  the 
transactions  are  actually  recorded.  If,  however,  the  amount  of  suqh 
items  is  relatively  so  large  that  its  inclusion  in  the  expense  accounts 
for  a  single  year  would  result  in  a  seriously  abnormal  income  state- 
ment, and  no  provision  has  been  made  through  accruals  to  reserves  or 


72  OPERATING   EXPENSE   ACCOUNTS 

suspense  accounts  for  anticipating  such  transactions,  the  accounting 
company  may  distribute  the  amount  or  any  part  thereof  to  Profit  and 
Loss. 

5.  Salvage  and  Insurance. 

Salvage  and  insurance  received  in  connection  with  maintenance  jobs 
not  involving  deductions  from  fixed  capital  shall  be  credited  to  the 
appropriate  maintenance  account.  (See  "Fixed  Capital  Accounts — 
General  Instructions  and  Definitions,"  Section  6,  Page  30). 

If  the  insurance  for  damaged  property  is  relatively  large,  and  is 
received  before  the  repairs  have  been  completed,  a  disproportionate 
credit  to  operating  expenses  may  be  avoided  by  crediting  the  amount 
of  the  insurance  recovered  to  a  suspense  account  to  which  the  cost  of  the 
repair  shall  then  be  charged  to  the  extent  that  it  is  covered  by  insurance. 

Insurance  recovered  in  connection  with  personal  injuries  shall  be 
credited  to  account  No.  783,  "Injuries  and  Damages"  or  the  appro- 
priate sub-division  thereof.  Dividends  distributed  by  mutual  insur- 
ance companies  shall  be  credited  to  the  account  to  which  the  insurance 
premium  is  charged.  Recoveries  under  fidelity  bonds  shall  be  credited 
to  the  account  charged  with  the  loss. 

6.  Retirement  Expense. 

An  account  is  provided  in  which  to  include  charges  made  in  order 
that  corporations  may,  through  the  creation  of  adequate  reserves, 
equalize  from  year  to  year,  as  nearly  as  is  practicable,  the  losses  in- 
cident to  important  retirements  of  buildings,  dams,  etc.,  or  of  large 
sections  of  continuous  structures  like  water  main,  or  of  definitely 
identifiable  units  of  plant  or  equipment.  "Losses"  used  above  means 
in  each  case  the  excess  of  the  original  cost  to  the  accounting  company 
of  the  property  retired  plus  the  cost  of  dismantling  or  removing,  over 
its  salvage  value  at  the  time  of  its  retirement.  The  cost  of  replacing 
minor  parts,  which  is  not  recorded  by  any  entries  in  the  fixed  capital 
accounts,  and  which  is  commonly  called  the  cost  of  "repairs"  or 
** maintenance"  as  distinguished  from  the  cost  of  "replacements"  of 
laige  imits,  need  not  be  provided  for  through  a  retirement  reserve. 
The  amounts  charged  to  retirement  expense  should  be  upon  a  basis 
determined  to  be  equitable  according  to  the  accounting  company's 
experience  and  best  sources  of  information,  and  should  in  all  cases 
be  sufficient  to  provide  during  a  period  of  years  a  reserve  against 
which  can  be  written  off  all  losses  sustained  upon  the  retirement  of 
property  for  any  cause  whatsoever. 

A  statement  of  the  rule  used  by  the  accounting  company  for  com- 
puting these  charges  shall  be  included  in  its  annual  report  to  the 
regulatory  commission.    If  the  accounting  company  so  desires,  it  may 


OPERATING   EXPENSE   ACCOUNTS  73 

file  with  the  commission  a  verified  copy  of  its  rule  for  determining 
annual  retirement  charges,  and  refer  to  such  rule  in  its  annual  report 
in  place  of  repeating  it  in  full  each  year. 

7.    Classification  of  Corporations  by  Revenue. 

For  the  purpose  of  this  classification  of  accounts  water  corporations 
are  divided  into  four  classes  as  follows : 

Class  A. — Corporations  having  average  annual  operating  revenues 
exceeding  $250,000. 

Class  B. — Corporations  having  average  annual  operating  revenues 
exceeding  $50,000,  but  not  over  $250,000. 

Class  C. — Corporations  having  average  annual  operating  revenues 
exceeding  $10,000,  but  not  over  $50,000. 

Class  D. — Corporations  having  average  annual  operating  revenues 
of  $10,000  or  less. 

In  order  that  frequent  changes  may  be  avoided,  the  class  to  which 
a  water  corporation  belongs  may  be  determined  by  the  average  of  its 
annual  revenues  for  the  three  years  next  preceding  the  effective  date 
of  this  accounting  classification.  If  at  the  close  of  any  fiscal  year 
following,  the  average  of  its  annual  revenues  for  the  three  next  pre- 
ceding years  is  greater  than  the  maximum  for  the  class  in  which  the 
corporation  has  been  grouped,  it  shall  automatically  be  grouped  with 
the  higher  class  in  which  it  falls  by  virtue  of  such  increased  annual 
revenues.  Corporations  engaged  in  new  enterprises  the  annual  revenue 
from  which  is  not  known  in  advance  shall  be  classed  in  accordance  with 
a  reasonable  estimate  of  their  prospective  revenue. 

The  classification  of  operating  expenses  which  follows  is  adapted  to 
corporations  in  all  four  classes.  The  primary  accounts  are  expanded 
and  subdivided  as  will  be  indicated  to  meet  the  needs  of  each  class. 
No  separate  definitions  are  stated  for  accounts  which  are  thus  divided, 
but  the  content  of  such  accounts  is  to  be  found  in  the  definitions  of 
the  final  subdivisions.  When  such  subdivisions  are  kept  as  primary 
ledger  accounts  it  will  not  be  necessary  to  keep  also  the  account  which 
has  been  subdivided. 

Each  corporation  will  be  expected  to  keep,  so  far  as  they  are  appli- 
cable to  its  business,  at  least  the  accounts  provided  for  the  class  to 
which  it  belongs.  Any  corporation  may,  however,  keep  any  or  all  of 
the  accounts  of  the  more  extended  schemes  provided  for  those  corpora- 
tions which  are  in  higher  revenue  classes.  If  desired  further  refine- 
ments or  extensions  of  the  scheme  of  accounts  to  meet  the  needs  of 
individual  corporations  may  be  made  by  subdividing  the  accounts 
herein  established,  provided  that  the  integrity  of  the  required  accounts 
is  not  impaired. 


74  OPERATING    EXPENSE   ACCOUNTS 


TEXT  PERTAINING  TO  OPERATING  EXPENSE 

ACCOUNTS 

700.  Source  of  Water  Supply  Expenses. 

701.  Superintendence  and  Labor. 
701-1.    Superintendence. 

This  account  shall  include  the  salaries  and  expenses  of  the  superin- 
tendent and  assistants,  chemists,  draftsmen,  foremen,  and  all  clerical 
help  upon  records  and  accounts  pertaining  to  the  source  of  water 
supply,  whether  such  service  is  performed  at.  the  general  office,  or  at 
the  plants. 

701-2.    Operating  Labor. 

This  account  shall  include  the  wages  of  patrolmen,  inspectors, 
caretakers,  and  other  employees  engaged  in  operating  head 
gates,  patrolling  of  drainage  area,  reservoirs,  dams,  and  other  facilities 
appurtenant  to  the  water  supply.  Do  not  include  maintenance  labor 
or  labor  pumping  water. 

702.  Operating  Supplies  and  Expenses. 

This  account  shall  include  the  cost  of  supplies  consumed  and  ex- 
penses incurred  in  the  operation  of  the  source  of  water  supply.  Do 
not  include  maintenance  supplies  or  expenses. 

703.  Maintenance  of  Source  of  Supply. 

703-1.    Repairs  to  Water  Supply  Buildings  and  Fixtures. 

This  account  shall  include  the  cost  of  labor  and  material  used  in 
repairs  to  buildings,  fixtures,  and  grounds  used  in  connection  with  the 
source  of  water  supply,  such  as  dwellings  occupied  by  patrolmen,  in- 
spectors, caretakers  >  and  other  employees  engaged  in  the  operation  of 
the  source  of  water  supply,  pump  houses,  well  houses,  and  other 
buildings. 

Note. — If  source  of  water  supply  pumping  is  done  in  the  pumping  station  where 
water  is  pumped  into  t^e  distribution  system,  this  account  may  be  charged  with 
an  equitable  portion  of  the  cost  of  maintaining  such  station  buildings,  fixtures  and 
jgrounds. 

703-2.     Repairs  to  Surface  Source  of  Supply  Facilities. 

This  account  shall  include  the  cost  of  labor  and  material  used  in 
repairs  to  impounding  reservoirs,  dams,  artificial  lakes  and  ponds, 
canals,  conduits,  embankments,  channels,  waste  weirs,  gates,  valves, 
gate  structures,  pipe  lines,  flumes,    aqueducts,   supporting'  trestles, 


OPERATING   EJCPENSE   ACCOUNTS  75 

viaducts,  and  appurtenant  equipment  when  used  for  collection  or 
diversion  of  water  from  a  surface  source  of  supply. 

703-3.    Repairs  to  Ground  Source  of  Water  Supply. 

This  account  shall  include  the  cost  of  labor  and  material  used  in 
repairs  to  large  open  wells,  shallow  tubular  wells,  deep  wells,  artesian 
wells,  springs,  and  repairs  to  infiltration  galleries.  Include  also  re- 
pairs to  collecting  reservoirs,  intake  wells,  and  conduits  and  appurte- 
nant equipment  when  used  for  the  collection  of  water  from  a  ground 
source  of  water  supply. 

704.    Water  Purchased  for  Resale. 

This  account  shall  include  the  cost  at  the  point  of  delivery  to  the 
utility  of  all  water  purchased  for  resale. 

Note. — Details  of  this  account  shall  be  kept  so  as  to  show  from  whom  purchased, 
quantity  purchased,  and  the  rate  and  amount  paid  therefor. 

710.  Steam  Power  Pumping. 

Note. — The  accounts  for  pumping  are  divided  according  to  the  source  of  power 
used,  into  three  general  groups,  namely:  steam  power  pumping,  electric  power 
pumping,  and  gas,  oil  or  hydraulic  power  pumping.  The  steam  power  pumping 
group  includes  all  accoimts  for  steam  power  pumping  operations  from  the  source 
of  water  supply  to  and  including  the  distribution  system.  In  like  manner  the  elec- 
tric power  pumping  group  includes  all  pumping  operations  by  electric  power,  and 
the  gas  or  oil,  or  hydraulic  power  pumping  includes  all  pumping  operations  by  gas, 
oil  or  hydraulic  power. 

Whenever  two  or  more  distinct  operations  are  involved,  and  the  cost  of  each  can 
be  ascertained,  sub-accounts  should  be  raised  under  the  various  primary  accounts 
of  the  appropriate  group,  to  show  separately  the  portions  thereof  relating  to  source 
of  water  supply  pumping,  purification  pumping  and  distribution  pumping. 

711.  Superintendence  and  Labor. 
711-1.    Superintendence. 

This  account  shall  include  the  cost  of  superintendence  of  steam 
power  pumping.  Charge  to  this  account  the  salaries  of  the  superin- 
tendent and  assistants,  draftsmen,  foremen,  and  all  clerical  help  upon 
records  and  accounts  pertaining  to  steam  power  pumping.  Include 
also  that  portion  of  the  salaries  of  the  engineering  staff  chargeable  to 
steam  power  pumping.  No  material  should  be  charged  to  this  ac- 
count. 

Note. — If,  in  addition  to  steam  power  pumping,  water  is  pumped  at  the  same 
station  by  electric,  oil  or  gas  power  the  cost  of  superintendence  at  such  station 
should  be  apportioned  and  the  appropriate  accouilt  under  each  method  used  should 
be  charged  accordingly. 

711-2.    Boiler  Labor. 

This  account  shall  include  the  cost  of  all  labor  incident  to  steam 
generation »    Charge  to  this  account  the  wages  of  boiler  house  fore- 


76  OPERATING   EXPENSE   ACCOUNTS 

men,  firemen,  helpers,  shovelers,  weighers,  feed  pump  men,  stokers, 
boiler  room  watchmen  and  janitors,  also  labor  employed  in  blowing 
flues,  cleaning  boilers  and  handling  coal  and  ashes.  Exclude  mainte- 
nance labor.  • 

711-3.    Pumping  Labor. 

This  account  shall  include  the  cost  of  all  labor  engaged  in  operating 
steam  power  pumping  equipment.  Charge  to  this  account  the  salaries 
and  wages  of  chief  engineers  and  assistants,  engineers,  oilers,  wipers, 
machinists  and  all  other  employees  whose  duties  concern  the  operation 
of  such  steam  power  pumping  equipment.  Exclude  maintenance 
labor. 

Note — If,  in  addition  to  steam  power  pumping,  water  is  pumped  at  the  same 
station  by  electric,  oil,  or  gas  power,  the  labor  cost  of  operating  the  pumps  at  such 
station  should  be  apportioned  and  the  appropriate  accoimt  under  each  method 
used  should  be  charged  accordingly. 

711-4.    Miscellaneous  Labor. 

This  account  shall  include  the  salaries  and  wages  of  the  employees 

in  and  about  the  steam  power  pumping  plant  not  assignable  to  any 

of  the  foregoing  accounts.    Exclude  maintenance  labor. 

Note. — ^When  another  department  within  the  company  makes  demand  upon  the 
same  boiler  plant,  sub-accounts  should  be  raised  to  show  separately. 

(a)  Labor  for  production  of  steam. 

(b)  Labor  for  piunping  water. 

Note. — If,  in  addition  to  steam  power  pumping,  water  is  pumped  by  electric, 
oil,  or  gas  power,  the  cost  of  miscellaneous  labor  at  such  station  should  be  appor- 
tioned and  the  appropriate  accoimt  imder  each  method  used  should  be  charged 
accordingly. 

712.     Steam  Pumping  Supplies  and  Expenses. 
712-1.     Fuel. 

This  account  shall  include  the  cost  of  all  fuel  for  producing  steam. 
Charges  shall  be  based  on  the  cost  delivered  at  plant  for  storage  and 
include  the  invoice  cost  of  fuel,  freight,  switching,  demurrage,  cost  of 
unloading  and  cartage  to  point  of  delivery  at  plant,  and  cost  of  trans- 
ferring fuel  from  one  storage  plant  to  another. 

Appropriate  debits  or  credits  shall  be  inade  to  this  account  to  adjust 
the'  book  figures  for  fuel  in  stock  to  the  actual  amount  on  hand  when 
discrepancies  are  disclosed  by  inventory. 

Note. — Charges  to  this  account  should  be  concurrently  credited  to  fuel  stock 
account  under  "Material  and  Supplies." 

712-2.     Water  for  Steam. 

This  account  shall  include  the  cost  of  water  for  boilers,  condensers, 
and  for  cooling  engines.    Such  cost,  when  water  is  purchased,  should 


OPERATING  EXPENSE  ACCOUNTS  77 

be  based  on  the  contract  price  or  meter  rate.  Include  also  the  cost  of 
boiler  compounds.  If  special  pumping  equipment  is  required  in  sup- 
plying water  for  such  purposes,  this  account  should  be  charged  with 
the  cost  of  operation  and  maintenance  of  the  equipment  involved. 

When  the  water  for  such  purposes  is  taken  from  the  supply  pumped 
for  general  distribution,  the  utility  may,  at  its  option,  charge  to  this 
account  the  pumpage  cost  of  the  water  so  i;sed,  crediting  such  charges 
to  account  No.  748,  ''Duplicate  Production  Chargfes — Cr." 

712-3.    Lubricants. 

This  account  shall  include  the  cost  of  lubricants  for  all  machinery 
and  apparatus  in  the  steam  power  pumping  plant,  including  engines, 
and  pumping  equipment  driven  by  steam  power. 

Oil  used  in  pumping  water  for  steam  should  be  charged  to  the 
account  "Water  for  Steam." 

Charge  also  to  this  account  the  cost  of  recovering  oil  from  waste 
and  the  cost  of  filtering  and  handling. 

712-4.    Miscellaneous  Steam  Power  Pumping  Station  Supplies 
and  £  penses. 

This  account  shall  include  the  cost  of  all  operating  supplies  used, 
and  expenses  incurred,  in  pumping  water  by  steam  power,  not  charge- 
able to  any  of  the  preceding  accounts.  This  will  include  power  plant 
records,  boiler  inspection,  water  for  fire  protection  and  general  use, 
light  and  heat  at  pumping  station,  telephone  service,  gaskets,  fire  tools, 
gauge  glasses  and  washers,  waste,  packing,  wipers,  hand  tools,  ice, 
janitors  supplies,  and  items  of  similar  nature. 

Note. — ^When  another  department  within  the  company  makes  demand  upon  the 
same  boiler  plant,  sub-accounts  should  be  raised  to  show  separately. 

(a)  Supplies  and  expenses  for  production  of  steam. 

(b)  Supplies  and  expenses  for  pimiping  water. 

Note — If,  in  addition  to  steam  power  pumping,  water  is  pumped  at  the  same 
station  by  electric,  oil  or  gas  power,  the  cost  of  pumping  station  supplies  and 
expenses  at  such  station  should  be  apportioned  and  the  appropriate  account 
under  each  method  used  should  be  charged  accordingly. 

713.    Maintenance  of  Steam  Pumping  Plant. 
713-1.    Maintenance  of  Steam  Power  Pumping  Buildings  and 
Fixtures. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 
steam  power  pumping  station  buildings,  fixtures,  and  grounds.  This 
will  include  repairs  to  structures  and  all  fixtures  permanently  attached 
thereto,  such  as  water  pipes  and  fixtures;  pipes  and  fixtures  for  warm- 
ing and  ventilation ;  gas  pipes  and  fixtures  for  lighting  purposes,  elec- 


78  OPERATING   EXPENSE   ACCOUNTS 

trie  wiring  and  fixtures  for  lighting,  signalling,  and  elevator  purposes, 
and  the  engines  and  motors  operating  them;  furnaces,  boilers,  etc., 
used  for  producing  steam  for  such  engines  and  for  heating;  electric 
generators  especially  provided  for  producing  current  for  lighting  such 
buildings ;  all  brick  and  concrete  smokestacks  used  for  heating  or 
power  plant  purposes;  fences,  walls,  sidewalks,  and  pavements,  adja- 
cent to  such  buildings.  Repairs  to  foundations  and  settings  prepared 
especially  for  certain  units  of  equipment  and  designed  to  last  no 
longer  than  such  units  shall  be  charged  to  the  account  to  which  is 
charged  the  maintenance  of  such  equipment. 

713-2.    Maintenance  of  Boilers  and  Accessories. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 
metal  smokestacks,  furnaces,  boilers,  feed  pumps,  economizers,  feed 
water  heaters,  hot  wells,  cold  wells,  superheaters,  flues  to  smokestack 
entrance,  boiler  water  purification  equipment,  stokers,  boiler  room 
cranes,  coal  and  ash  handling  equipment,  coal  crushers,  and  auxiliary 
equipment.  Also  the  specially  provided  foundations  and  settings  for 
such  equipment.  It  will  also  include  valves,  traps,  injectors,  expan- 
sion joints,  pipe  supports,  gauges,  gauge  boards,  and  similar  equip- 
ment. Repairs  to  conduits  for  station  wiring,  pipes  for  heating  build- 
ings, and  pipes  supplying  water  for  general  station  purposes,  should 
be  charged  to  account  No.  713-1,  "Maintenance  of  Steam  Power 
Pumping  Buildings  and  Fixtures." 

713-3.     Maintenance  of  Steam  Power  Pumping  Equipment. 

This  account  shall  include  the  cost  of  repairing  all  pumping  equip- 
ment driven  by  steam  power.  This  includes  steam  pum.ps  and  their 
prime  movers  whether  combined  into  one  machine,  or  are  separate 
units  of  equipment.  Include  also  repairs  to  appurtenant  equipment, 
such  as  condensers,  lubricating  systems,  belting,  etc. 

713-4.    Maintenance  of  Miscellaneous  Steam  Pumping  Plant 
Equipment. 

This  account  shall  include  the  cost  of  repairing  and  maintaining  all 
steam  power  pumping  station  plant  equipment,  not  includible  in  any 
of  the  preceding  accounts,  such  as  cranes,  hoists,  machine  tools,  safety 
appliances,  and  other  miscellaneous  steam  power  pumping  station 
equipment. 

Note. — If,  in  addition  to  steam  power  pumping,  water  is  pumped  by  electric,  oil 
or  gas  power,  the  cost  of  maintenance  of  miscellaneous  pumping  station  equipment 
should  be  apportioned  and  the  appropriate  account  under  each  method  used  should 
be  charged  accordingly,  in  so  far  as  the  use  of  such  equipment  is  common  to  the 
different  methods  of  pumping  involved. 


OPERATING    EXPENSE   ACCOTTNTS  79 

714.  Steam  from  other  Sources. 

This  account  shall  include  the  cost  of  all  steam  purchased  or  jointly- 
produced  steam  consumed  in  pumping  water. 

Note. — In  case  such  steam  is  jointly  produced,  i.  e.,  produced  by  another  person 
or  corporation  under  a  joint  arrangement  for  sharing  the  cost  of  production  in  pro- 
portion to  the  benefits  to  the  several  participants,  the  charge  to  this  account  may 
include  a  proportion  to  cover  depreciation  of  plant  employed,  as  well  as  a  proportion 
of  direct  expense,  but  it  must  not  include  any  allowance  or  return  upon  the  cost  or 
value  of  the  plant.  The  amount  representing  such  allowance  if  any,  will  be  charged 
to  account  No.  421,  "Miscellaneous  Rent  Revenues." 

715.  Steam  Generated — Apportionment  Account. 

This  account  shall  be  raised  only  by  companies  operating  in  con- 
nection with  the  water  utility,  other  utilities  (see  third  paragraph)  or 
departments  which  make  demand  upon  the  same  boiler  plant. 

Where  a  demand  of  this  character  is  made  upon  a  boiler  plant; 
the  expenses  incident  to  generating  steam  shall  be  transferred  from 
the  foregoing  accounts  to  this  account  at  the  close  of  the  month.  The 
total  cost  of  generating  steam  as  then  shown  shall  be  apportioned  to 
the  utilities  or  departments  using  the  steam  and  this  account  credited 
with  such  amounts  as  charged  to  other  utilities. 

If  the  water  utility  is  operated  in  connection  with  an  electric  utility 
and  the  steam  supplied  is  obtained  from  a  common  boiler  plant,  the 
cost  of  generating  steam  will  be  kept  according  to  the  electric  group 
of  accounts,  the  total  cost  thereof  apportioned,  and  the  amount 
chargeable  to  the  water  utility  shall  be  included  in  this  account. 

The  details  of  the  cost  of  generating  steam,  and  the  amounts  appor- 
tioned to  the  different  utilities  or  departments  using  the  steam,  and 
the  basis  used  for  the  apportionment  will  be  called  for  in  the  annual 
report  to  the  Commission.  . 

720.  Electric  Power  Pumping. 

Note. — See  note  under  Account  No.  710,  "Steam  Power  Pumping." 

721.  Superintendence  and  Labor. 

721-1.    Superintendence. 

This  account  shall  include  the  cost  of  superintendence  of  electric 
power  pumping.  Charge  to  this  account  the  salaries  of  the  superinten- 
dent and  assistants,  draftsmen,  foremen,  and  all  clerical  help  upon 
records  and  accounts  pertaining  to  electric  power  pumping.  Include 
also  that  portion  of  the  salaries  of  the  engineering  staff  chargeable  to 
electric  power  pumping .    No  material  should  be  charged  to  this  account . 

Note. — If,  in  addition  to  electric  power  pumping,  water  is  pumped  at  the  same 
station  by  steam,  oil  or  gas  power,  the  cost  of  superintendence  at  such  station  should 
be  apportioned  and  the  appropriate  account  under  each  method  used  should  be 
charged  accordingly. 


80  OPERATING  EXPENSE  ACCOUNTS 

721-2.    Pumping  Labor. 

This  account  shall  include  the  cost  of  all  labor  engaged  in  operating 
electric  power  pumping  equipment.  Charge  to  this  account  the 
salaries  and  wages  of  motor  attendants,  assistants,  pumpmen,  oilers, 
wipers,  machinist  and  all  other  employees  whose  duties  concern  the 
operation  of  such  electric  power  pumping  equipment.  Exclude  main- 
tenance labor. 

Note. — If,  in  addition  to  electric  power  pumping,  water  is  pumped  at  the  same 
station  by  steam,  oil  or  gas  power,  the  labor  cost  of  operating  pumps  at  such  station 
should  be  apportioned  and  the  appropriate  accoiint  under  each  method  used  should 
be  charged  accordingly. 

721-3.    Miscellaneous  Labor. 

This  account  shall  include  the  salaries  and  wages  of  all  employees 

in  and  about  the  electric  power  pumping  plant  not  assignable  to  any 

of  the  foregoing  accounts.    Exclude  maintenance  labor. 

Note. — If,  in  addition  to  electric  power  pimiping,  water  is  pumped  at  the  same 
station  by  steam,  oil  or  gas  power,  the  cost  of  miscellaneous  labor  at  such  station 
should  be  apportioned  and  the  appropriate  account  \mder  each  method  used  should 
be  charged  accordingly. 

722.  Electric  Pumping  Supplies  and  Expenses. 
722-3.    Lubricants. 

This  account  shall  include  the  cost  of  lubricants  for  all  machinery 
and  apparatus  in  the  electric  power  pumping  plant,  including  motors 
and  pumping  equipment  driven  by  electric  power.  Charge  also  to 
this  account  the  cost  of  recovering  oil  from  waste  and  the  cost  of 
filtering  and  handling. 

722-4.    Miscellaneous  Electric  Power  Pumping  Supplies  and 
Expenses. 

This  account  shall  include  the  cost  of  all  operating  supplies  used 
and  expenses  incurred  in  pumping  water  by  electric  power,  not  charge- 
able to  any  of  the  preceding  accounts.  This  will  include  power  plants 
records,  water  for  fire  protection  and  general  use,  light  and  heat  at 
pumping  station,  telephone  service,  waste,  packing,  wipers,  hand  tools, 
and  ice,  janitors  supplies  and  items  of  similar  nature. 

Note. — If,  in  addition  to  electric  power  pumping,  water  is  pumped  at  the  same 
station  by  steam,  oil  or  gas  power,  the  cost  of  pumping  station  supplies  and  expenses 
at  such  station  should  be  apportioned  and  the  appropriate  account  under  each 
method  used  should  be  charged  accordingly. 

723.  Maintenance. 

723- L    Maintenance  of  Electric  Pumping  Buildings  and  Fix- 
tures. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 


1 


OPERATING   EXPENSE   ACCOUNTS  81 

electric  power  pumping  auicion  buildings,  fixtures  and  grounds.  This 
will  include  repairs  to  structures  and  all  fixtures  permanently  attached 
thereto,  such  as  water  pipes  and  fixtures;  pipes  and  fixtures  for  warm- 
ing and  ventilating;  gas  pipes  and  fixtures  for  lighting  purposes;  elec- 
tric wiring  and  fixtures  for  lighting,  signalling  and  elevator  purposes, 
and  the  engines  and  motors  operating  them;  furnaces,  boilers,  etc., 
used  for  producing  steam  for  such  engines  and  heating ;  electric  gener- 
ators especially  provided  for  producing  current  for  lighting  such  build- 
ings; all  brick,  concrete,  iron  or  steel  smokestacks  used  for  heating  or 
power  plant  purposes;  fences,  walls,  sidewalks  and  pavements,  adja- 
cent to  such  buildings.  Repairs  to  foundations  and  settings  prepared 
especially  for  certain  units  of  equipment  and  designed  to  last  no 
longer  than  such  units  shall  be  charged  to  the  account  to  which  is 
charged  the  maintenance  of  such  equipment. 

Note. — If,  in  addition  to  electric  power  pumping,  water  is  pumped  at  the  same 
station  by  steam,  oil  or  gas  power,  the  cost  of  maintenance  of  electric  power  pump- 
ing buildings  and  fixtures  at  such  stations  should  be  apportioned  and  the  appro- 
priate account  under  such  method  used  should  be  charged  accordingly. 

723-2.    Maintenance  of  Electric  Pumping  Equipment. 

This  account  shall  include  the  cost  of  repairing  all  pumping  equip- 
ment driven  by  electric  power.  This  will  include  pumps,  motors, 
switchboards,  air  and  circulating  pumps,  lubricating  systems,  motor 
generator  sets  and  other  accessory  equipment. 

723-3.    Maintenance  of  Miscellaneous  Pumping  Station  Equipi- 
ment. 

This  accoimt  shall  include  the  cost  of  repairing  and  maintaining  all 
electric  power  pumping  station  equipment  not  includible  in  any  of  the 
preceding  accounts,  such  as  cranes,  hoists,  machine  tools,  safety 
appliances  and  other  miscellaneous  pumping  station  equipment. 

Note. — If,  in  addition  to  electric  pumping,  water  is  pumped  at  the  same  station 
by  steam,  oil  or  gas  power,  the  cost  of  maintenance  of  miscellaneous  pumping  station 
equipment  at  such  station  should  be  apportioned  and  the  appropriate  account  imder 
each  method  used  should  be  charged  accordingly  in  so  far  as  the  use  of  such  equip- 
ment is  common  to  the  different  methods  of  pumping  involved. 

724.    Power  Purchased  or  Transferred  from  other  Departments 

This  account  shall  include  the  cost,  at  the  point  of  delivery  to  the 
utility,  of  all  electric  power  purchased.  This  account  shall  also  in- 
clude the  cost  to  the  utility  of  all  electric  power  produced  by' another 
company  under  any  joint  arrangement  for  the  sharing  of  expenses, 
upon  the  basis  of  the  relative  amounts  of  benefits  to  the  several  par- 
ticipants; such  cost  may  include  a  proportion  to  cover  depreciation 
on  the  property  involved,  as  well  as  a  proportion  of  direct  expense 


82  OPERATING   EXPENSE   ACCOUNTS 

but  it  must  not  include  any  allowance  or  return  upon  the  cost  or 
value  of  the  property. 

When  electric  power  is  transferred  from  another  department,  such 
as  electric  utility,  this  account  shall  include  an  equitable  proportion 
of  operating  expenses  incurred  by  the  department  of  the  utility  pro- 
ducing the  electric  power  consumed  by  the  water  department  for 
pumping.  This  charge  should  not  include  any  allowance  or  return 
upon  the  cost  or  value  of  the  property  employed,  nor  should  the 
charge  include  any  portion  of  general  and  miscellaneous  expenses. 
Only  expenses  directly  related  to  the  production  of  electric  energy 
may  be  included  in  this  account. 

730.  Gas  or  Oil  Power  Pumping. 

See  note  under  710,  "Steam  Power  Pumping." 

731.  Superintendence  and  Labor. 
731-1.    Superintendence. 

This  account  shall  include  the  cost  of  superintendence  of  gas  or  oil 
power  pumping.  Charge  to  this  account  the  salaries  of  the  superin- 
tendent and  assistants,  draftsmen,  foremen  and  all  clerical  help  upon 
records  and  accounts  pertaining  to  gas  or  oil  power  pumping.  Include 
also  that  portion  of  the  salaries  of  the  engineering  staff  chargeable  to 
gas  or  oil  power  pumping.  No  material  should  be  charged  to  this 
account. 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  piimped  at  the  same 
station  by  steam  or  electric  power,  the  cost  of  local  superintendence  at  such  station 
should  be  apportioned  and  the  appropriate  account  under  each  method  used  should 
be  charged  accordingly. 

731-2.    Producer  Labor. 

This  account  shall  include  all  operating  labor  engaged  in  the  pro- 
duction of  power  gas,  including  the  handling  of  fuel  from  storage  to 
the  gas  generator  building,  and  handling  of  residuals  from  the  gener- 
ator building  to  the  point  where  residuals  are  placed  when  removed 
from  the  building.    Exclude  maintenance  labor. 

731-3.    Pumping  Labor. 

This  account  shall  include  the  cost  of  all  labor  engaged  in  operating 
gas  or  oil  power  pumping  equipment.  Charge  to  this  account  salaries 
and  wages  of  chief  engineers  and  assistant  engineers,  oilers,  wipers, 
machinists. and  all  other  employees  engaged  in  the  operation  of  the 
gas  or  oil  power  pumping  equipment.    Exclude  maintenance  labor. 


OPERATING    EXPENSE   ACCOUNTS  83 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  pumped  at  the  same 
station  by  steam  or  electric  power,  the  labor  cost  of  operating  pumps  at  such  stations 
should  be  apportioned  and  the  appropriate  account  under  each  method  used  should 
be  charged  accordingly. 

731-4.    Miscellaneous  Pumping  Labor. 

This  account  shall  include  the  salaries  and  wages  of  all  employees 
in  and  about  the  gas  or  oil  power  pumping  plant  not  assignable  to 
any  of  the  foregoing  accounts.    Exclude  maintenance  labor. 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  pumped  at  the  same 
station  by  steam  or  electric  power,  the  cost  of  miscellaneous  labor  at  such  station 
should  be  apportioned  and  the  appropriate  account  imder  each  method  used  should 
be  charged  accordingly. 

732.     Gas  or  Oil  Pumping  Supplies  and  Expenses. 
732-1.     Fuel. 

This  account  shall  include  the  cost  of  all  fuel  used  for  producing  gas 
for  gas  engines  and  also  fuel  for  oil  or  gasoline  engines.  Charges  shall 
be  based  on  the  cost  delivered  at  plant  for  storage,  and  include  the 
invoice  cost  of  fuel,  freight,  switching,  demurrage,  cost  of  unloading 
and  cartage  to  point  of  delivery  at  plant,  and  the  cost  of  transferring 
fuel  from  one  storage  point  to  another. 

Appropriate  debits  or  credits  shall  be  made  to  this  account  to  adjust 

the  book  figures  for  fuel  in  stock  to  the  actual  amount  on  hand  when 

discrepancies  are  disclosed  by  inventory. 

Note. — Charges  to  this  account  should  be  concurrently  credited  to  fuel  stock 
account  under  "Materials  and  Supplies." 

732-2.    Water. 

This  account  shall  include  the  cost  of  water  used  in  the  production 
of  gas  for  power  purposes,  and  water  used  for  cooling  gas  or  oil  prime 
movers.  . 

If  water  is  purchased,  charge  at  the  contract  price  or  the  meter 
rates.  If  special  pumping  equipment  is  required  in  supplying  water 
for  such  purposes,  this  account  shall  be  charged  with  the  cost  of 
operation  and  maintenance  of  the  equipment  involved. 

When  the  water  for  such  purposes  is  taken  from  the  supply  pumped 
for  general  distribution,  the  utility  may,  at  its  option,  charge  to  this 
account  the  pumpage  cost  of  the  water  so  used,  crediting  such  charges 
to  account  No.  749,  Production  Expenses  Transferred— Cr. 

732-3.    Lubricants. 

This  account  shall  include  the  cost  of  lubricants  for  all  machinery 
and  apparatus  in  the  gas  or  oil  power  pumping  plant,  including  gas 
producer  machinery,  engines,  pumps,  and  auxiliary  equipment. 


84  OPERATING  EXPENSE  ACCOUNTS 

Oil  used  in  pumping  water  for  power  gas  purposes  should  be  charged 
to  the  account  "Water." 

Charge  also  to  this  account  the  cost  of  recovering  oil  from  waste 
and  the  cost  of  filtering  and  handling. 

732-4.    Miscellaneous  Gas  or  Oil  Pumping  Station  Supplies 
and  Expenses. 

This  account  shall  include  the  cost  of  all  operating  supplies  used 
and  expenses  incurred  in  pumping  water  by  gas  or  oil  power,  not 
chargeable  to  any  of  the  preceding  accounts.  This  will  include  power 
plant  records,  boiler  inspection,  water  for  fire  protection  and  general 
use,  light  and  heat  at  pumping  station,  telephone  service,  gaskets, 
fire  tools,  gauge  glasses  and  washers,  waste,  packing,  wipers,  hand 
tools,  ice,  janitors  supplies  and  items  of  similar  nature. 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  pumped  at  the  same 
station  by  steam  or  electric  power,  the  cost  of  pumping  station  supplies  and  expenses 
at  such  station  should  be  apportioned  and  the  appropriate  accoimt  under  each 
method  used  should  be  charged  accordingly. 

733.    Maintenance. 

733-1.    Maintenance  of  Gas  or  Oil  Power  Pumping  Buildings 
and  Fixtures. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 
gas  or  oil  power  pumping  station  building  and  fixtures.  This  will  in- 
clude repairs  to  structures  and  all  fixtures  permanently  attached 
thereto,  such  as  water  pipes  and  fixtures ;  pipes  and  fixtures  for  warm- 
ing and  ventilating;  gas  pipes  and  fixtures  for  lighting  purposes;  elec- 
tric wiring  and  fixtures  for  lighting,  signaling,  and  elevator  purposes, 
and  the  engines  and  motors  operating  them,  furnaces,  boilers,  etc., 
used  for  producing  steam  for  such  engines  and  for  heating;  electric 
generators  especially  provided  for  producing  current  for  lighting  such 
buildings;  all  brick,  concrete,  iron  or  steel  smokestacks  used  for  heat- 
ing or  power  plant  purposes;  fences,  walls,  sidewalks  and  pavements, 
adjacent  to  such  buildings.  Repairs  to  foundations  and  settings  pre- 
pared especially  for  certain  units  of  equipment  and  designed  to  last 
no  longer  than  such  units  shall  be  charged  to  the  account  to  which  is 
charged  the  maintenance  of  such  equipment. 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  pumped  at  the  same 
station  by  steam  or  electric  power,  the  cost  of  maintenance  of  buildings  and  fixtures 
at  such  station  should  be  apportioned  and  the  appropriate  account  for  each  method 
of  operating  should  be  charged  accordingly. 

.  733-2.     Maintenance  of  Gas  Producer  and  Auxiliary  Equip- 
ment. 

This  account  shall  include  the  cost  of  repairing  and  maintaining  gas 


OPERATING    EXPENSE   ACCOUNTS  85 

producers  and  accessories  devoted  to  the  production  of  gas  for  operat- 
ing gas  engines.  This  will  include  producers,  economizers,  regener- 
ators, vaporizers,  steam  injectors,  scrubbers,  exhausters,  seals,  espe- 
cially provided  boilers  and  pumps,  flues,  blower  engines  and  accessory- 
apparatus. 

733-3.    Maintenance  of  Gas  or  Oil  Power  Pumping  Equipment. 

This  account  shall  include  the  cost  of  repairing  all  pumping  equip- 
ment driven  by  gas  or  oil  power.  This  will  include  pumps,  engines, 
lubricating  systems,  igniting  and  starting  apparatus  and  other  acces- 
sory equipment. 

733-4.    Maintenance  of  Miscellaneous  Gas  or  Oil  Power  Pump- 
ing Station  Equipment. 

This  account  shall  include  the  cost  of  repairing  and  maintaining  all 
gas  or  oil  power  pumping  station  equipment,  not  includible  in  any  of 
the  preceding  accounts  such  as  cranes,  hoists,  machine  tools,  safety 
appliances  and  other  miscellaneous  gas  or  oil  power  pumping  station 
equipment. 

Note. — If,  in  addition  to  gas  or  oil  power  pumping,  water  is  pumped  at  the  sam  e 
station  by  steam  or  electric  power,  the  cost  of  maintenance  of  miscellaneous  pump- 
ing station  equipment  should  be  apportioned  and  the  appropriate  account  under 
each  method  should  be  charged  accordingly,  in  so  far  as  the  use  of  such  equipment 
is  common  to  the  different  methods  of  pumping  involved. 

734.    Power  Gas  Purchased  or  Transferred  from  other  Depart- 
ments. 

This  account  shall  include  the  cost,  at  the  point  of  delivery  to  the 
utility,  of  all  power  gas  purchased.  This  account  shall  also  include 
the  cost  to  the  utility  of  all  power  gas  produced  by  another  company, 
under  any  joint  arrangement  for  the  sharing  of  expense,  upon  the 
basis  of  the  relative  amounts  of  benefits  to  the  several  participants; 
such  cost  may  include  a  proportion  to  cover  depreciation  on  the  prop- 
erty employed,  as  well  as  a  proportion  of  direct  expense,  but  it  must 
not  include  any  allowance  or  return  upon  the  cost  or  value  of  the 
property. 

When  power  gas  is  transferred  from  another  department,  this 
account  shall  include  an  equitable  proportion  of  operating  expenses 
incurred  by  the  department  of  the  utility  producing  the  power  gas 
used  by  the  water  utility  for  pumping  water.  This  charge  should  not 
include  any  allowance  or  return  upon  the  cost  or  value  of  the  property 
employed  nor  should  the  charge  include  any  portion  of  general  or 
miscellaneous  expenses.  Only  expenses  directly  related  to  the  produc- 
tion of  gas  may  be  included  in  this  account. 


86  OPERATING   EXPENSE   ACCOUNTS 

H-730.     Hydraulic  Power  Pumping. 

See  note  under  account  710,  "Steam  Power  Pumping, 


ft 


H-731.     Superintendence  and  Labor. 
H-731-1.    Superintendence. 

This  account  shall  include  the  total  cost  of  superintendence  of  the 
hydraulic  power  pumping  plant.  This  account  includes  the  salaries 
of  the  superintendent  of  pumping  plant,  foremen,  draftsmen,  chemists 
and  all  clerical  help  upon  records  and  accounts  pertaining  to  hydraulic 
power  pumping,  whether  such  services  are  performed  at  the  general 
office  or  at  the  plant.  Cfiarge  also  with  the  proportion  of  salaries  of 
engineering  staff  assignable  to  the  hydraulic  power  pumping  plant. 

Note. — If  water  is  also  pumped  by  other  than  hydraulic  power  at  the  same  station, . 
the  total  cost  of  superintendence  will  be  apportioned  over  the  corresponding  super- 
intendence accounts  in  the  respective  groups  of  pumping  accounts. 

H-731-2.     Hydraulic  Labor. 

This  account  shall  include  the  salaries  and  wages  of  all  employes 
operating  the  hydraulic  works,  including  hydraulic  foremen,  gatemen, 
wheelmen,  canal  men,  patroUers  of  reservoirs,  dams,  and  channels  and 
all  other  employes  whose  duties  concern  the  operation  of  hydraulic 
power  equipment.    Exclude  maintenance  labor. 

H-731-3.    Pump  Labor. 

This  account  shall  include  the  cost  of  all  labor  engaged  in  operating 
the  hydraulic  power  pumping  equipment.  This  includes  such  labor 
as  that  of  foremen  and  assistants,  oilers,  wipers  and  all  other  employes 
whose  duties  concern  the  operation  of  such  hydraulic  power  pumps. 
Exclude  all  maintenance  labor. 

Note. — If  water  is  also  pumped  at  the  station  by  other  than  hydraulic  power, 
pump  labor  jointly  incurred  will  be  apportioned  over  the  corresponding  accounts  in 
the  respective  groups  of  pumping  accounts. 

H-731 -4.     Miscellaneous  Labor. 

This  account  shall  include  the  salaries  and  wages  of  all  employes  in 
and  about  the  hydraulic  power  pumping  plant  engaged  in  operating 
such  plant,  including  watchmen,  labor  cleaning  btiildings  and  yards, 
janitors,  messengers  and  general  labor  not  chargeable  to  any  of  the 
foregoing  hydraulic  power  pumping  operating  labor  accounts.  Ex- 
clude maintenance  labor. 

Note. — If  water  is  also  pumped  by  other  than  hydraulic  power,  labor  charges 
jointly  incurred  will  be  apportioned  accordingly  over  the  appropriate  classes  of 
pumping  accounts. 


OPERATING   EXPENSE  ACCOUNTS  87 

H-732.    Hydraulic  Pumping  Supplies  and  Expenses. 
H-732-3.    Lubricants. 

Charge  to  this  account  the  cost  of  all  lubricants  for  hydraulic  power 
pumping  equipment  and  all  machinery  connected  therewith  in  the 
hydraulic  power  pumping  plant.  This  includes  machine  oil,  pump 
oil,  graphite  and  other  lubricants,  but  does  not  include  wagon  grease  or 
oils  for  lanterns. 

Note. — If  water  is  also  ptimped  at  the  plant  by  other  than  hydraulic  power,  the 
total  cost  of  lubricants  will  be  apportioned  over  the  corresponding  accounts  in  the 
respective  groups  of  pumping  accounts. 

H-732-4.    Miscellaneous  Pumping  Station  Supplies  and 
Expenses. 

This  account  shall  include  all  the  operating  supplies  and  expenses 
incurred  in  the  pumping  of  water  by  hydraulic  power  not  chargeable 
to  any  of  the  preceding  accounts.  This  includes  such  items  as  waste 
packing,  wipers,  hand  tools,  gas  or  electricity  for  lighting,  heating  and 
cleaning  pumping  station,  laboratory  apparatus  and  supplies,  ice, 
water  for  general  use  and  fire  protection,  and  all  other  items  of  similar 
nature.  Charge  this  account  also  with  stationery,  telephones,  etc.,  if 
it  is  desired  to  distribute  such  expenses. 

Note. — ^Where  water  is  also  pumped  at  the  station  by  other  than  hydraulic  power, 
the  total  cost  of  miscellaneous  pumping  station  supplies  and  expenses  will  be  appor- 
tioned over  the  corresponding  accounts  in  the  respective  groups  of  pumping  accounts. 

H-733.    Maintenance. 

H-733-1.    Maintenance   of  Dams,    Canals   and   Flumes   and 
Buildings  and  Fixtures. 

This  account  shall  include  all  expenses  for  labor  and  materials  in- 
curred in  repairing  hydraulic  structures.  Such  structures  include 
dams,  embankments,  etc.,  for  impounding  water  and  all  appurtenant 
gates,  valves,  weirs,  waste-ways,  canals  and  conduits,  and  other  chan- 
nels, including  riprap,  lining  walls,  etc.,  pipe  lines,  flumes,  aqueducts 
and  supporting  trestles,  forebays  and  appurtenant  sieves  and  grigs, 
waste  ways,  etc.,  all  viaducts,  bridges,  foot  bridges,  etc.,  over  and 
accessory  to  or  necessitated  by  such  canals,  aqueducts  and  flumes, 
and  also  the  wasteways,  conducting  the  water  from  the  outlet  of  the 
draft  tube  to  the  point  of  final  discharge.    Exclude  opemting  labor. 

H-733-2.    Maintenance  of  Turbines  and  Water  Wheels. 

This  account  shall  include  all  expenses  for  labor  and  supplies  in- 
curred in  repairing  the  hydraulic  motive  power,  including  head  gates, 
pen  stocks,  wheel  gates,  wheel  governors,  valves,  turbines,  water 


88  OPERATING   EXPENSE   ACCOUNTS 

wheels,  draft  tubes,  and  connections.  The  maintenance  of  power 
transmission  apparatus  as  shafts,  belts,  etc.,  will  not  be  charged  to 
this  account.    Exclude  operating  labor. 

H-733-3.    Maintenance  of  Hydraulic  Power  Pumping  Equip- 
ment. # 

Charge  this  account  with  all  expenses  for  labor  and  material  in- 
curred in  repairing  hydraulic  power  pumping  equipment.  Do  not 
charge  this  account  with  repairs  to  hydraulic  power  transmission 
equipment.    Exclude  operating  labor. 

H-733-4.    Maintenance    of    Miscellaneous    Hydraulic    Power 
Pumping  Equipment. 

This  account  shall  include  all  expenses  for  labor  and  material  in- 
curred in  making  repairs  to  the  hydraulic  power  pumping  station 
auxiliary  equipment.  This  includes  repairs  to  oiling  systems,  power 
transmission  equipment  such  as  shafting,  belting,  rope  and  cable, 
drivers,  clutches,  pulleys,  idler  wheels,  and  auxiliary  motors,  hoists, 
cranes,  blacksmiths'  and  machinists'  tools  and  all  other  accessory 
equipment  other  than  hand  tools,  the  cost  of  which  is  to  be  included 
in  operating  expenses.    Exclude  operating  labor. 

Note. — If  water  is  also  pumped  at  the  station  by  other  than  hydraulic  power, 
the  cost  of  maintaining  pumping  station  auxiliary  equipment  used  for  the  joint 
benefit  of  the  different  methods  of  piunping  will  be  apportioned  over  the  appropri- 
ate maintenance  accoimts  of  the  respective  classes  of  pimiping  accounts. 

H-734.    Hydraulic  Power  Purchased. 

This  account  shall  include  the  cost  of  all  water  purchased  for  the 
purpose  of  operating  the  hydraulic  power  pumping  equipment.  It  is 
desired  that  this  account  shall  be  so  kept,  as  to  indicate  the  name  of 
the  company  or  individual  from  whom  such  water  was  purchased,  the 
amount  of  water  power  purchased  and  the  terms  under  which  it  was 
purchased^ 

740.  Purification. 

741.  Superintendence  and  Labor. 
741-1.    Superintendence. 

This  account  shall  include  the  cost  of  all  operating  labor  employed 
in  the  superintendence  of  purification  and  filtration.  This  will  in- 
clude the  salaries  and  expenses  of  superintendents,  assistants,  chemists, 
general  foremen,  clerical  help  on  records  and  accounts,  and  such  por- 
tion of  the  salaries  of  the  engineering  staff  as  may  be  assignable  to 
purification  and  filtration. 


OPERATING   EXPENSE   ACCOUNTS  89 

741-2.     Purification  Labor. 

This  account  shall  include  the  cost  of  labor  engaged  in  the  different 
processes  of  purification,  from  the  point  where  water  is  received  into 
the  system  to  the  point  where  it  is  ready  for  distribution.  This  will 
include  labor  for  operating  filters,  and  water  treatment  equipment, 
cleaning  basins,  removal  of  ice  and  sediment,  etc.  Exclude  main- 
tenance labor. 

742.  Purification  Supplies  and  Expenses. 

This  account  shall  include  the  cost  of  supplies  consumed,  and  ex- 
penses, elsewhere  unprovided  for,  incurred  by  the  utility  in  the  opera- 
tion of  its  purification  facilities.  This  will  include  the  cost  of  all 
chemicals  consumed  in  the  purification  process;  light  and  heat,  ice, 
towels  and  soap,  brooms  and  similar  items. 

Utilities  may,  at  their  option,  charge  to  this  account  the  cost  of 
water  used  for  washing  filters,  and  cleaning  other  structures  and 
equipment  for  the  purification  of  water.  Such  charges  when  made 
should  be  credited  to  account  No.  749,  Production  Expenses 
Transferred — Cr. 

743.  Maintenance. 

743-1.    Maintenance  of  Purification  Buildings  and  Fixtures. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 
buildings,  fixtures,  and  grounds  devoted  to  the  purification  of  water. 

743-2.    Maintenance  of  Purification  Equipment. 

This  account  shall  include  the  cost  of  repairing  and  maintaining  all 
equipment  used  in  the  various  stages  of  water  purification.  This  will 
include  repairs  to  sedimentation  and  coagulating  basins,  clear  water 
basins,  filters  and  their  appurtenant  equipment,  water  treatment 
equipment,  renewing  sand,  washing  sand,  etc. 

748.  Duplicate  Production  Charges— Cr. 

This  account  shall  be  credited  with  all  charges  made  to  production 
accounts  for  water  consumed  at  pumping  and  purification  plants  ,and 
not  otherwise  provided  for. 

749.  Production  Expenses  Transferred — Cr. 

This  account  shall  include  such  part  of  the  utility's  cost  of  producing 
water  as  is  properly  chargeable  to  another  co-ordinate  department,  as, 
for  example,  an  electric  or  gas  department. 


90  OPERATING    EXPENSE   ACCOUNTS 

750.  Transmission  and  Distribution. 

751.  Labor  Supplies  and  Expenses. 
751-1.    Superintendence. 

This  account  shall  include  the  cost  of  all  operating  labor  employed 
in  the  superintendence  of  the  transmission  and  distribution  system. 
This  will  include  the  salaries  and  expenses  of  superintendents,  assis- 
tants, general  foremen,  clerical  help  on  records  and  accounts,  and  such 
portion  of  the  salaries  of  the  engineering  staff  as  may  be  assignable  to 
transmission  and  distribution. 

751-2.    Storage  Reservoir,  Tank  and  Standpipe  Labor. 

This  account  shall  include  the  cost  of  labor  engaged  in  patrolling, 
inspecting,  and  operating  the  distribution  storage  facilities,  including 
distribution  reservoirs,  tanks  and  standpipes.  Exclude  maintenance 
labor. 

751-3.    Maps  and  Records. 

This  account  shall  include  the  upkeep  cost  of  maps  and  records  of 
the  transmission  and  the  distribution  system,  including  salaries  and 
expenses  of  mappers,  draftsmen,  cost  of  drawing  material,  stationery 
and  other  miscellaneous  items. 

751-4.    Inspecting  and  Testing  Meters  and  Measuring  Devices. 

This  account  shall  include  the  salaries  and  expense  of  superinten- 
dents and  clerks  in  the  meter  bureau  and  that  portion  of  the  salaries 
of  the  engineering  staff  assignable  to  this  account;  also  the  cost  of 
light,  heat,  ice,  water,  and  other  supplies  and  expenses  of  the  meter 
testing  bureau;  and  the  cosi  of  testing  meters  on  consumers'  premises 
or  in  meter  shops. 

751-5.    Removing  and  Resetting  Meters  and  Measuring  Devices. 

This  account  shall  include  the  cost  of  labor  and  other  expense  in- 
cident to  removing  and  resetting  meters  and  measuring  devices  on 
consumers'  premises;  also  the  cost  of  disconnecting  and  reconnecting 
services. 

For  the  cost  of  the  first  setting  meters  on  new  service  lines,  or  lines 
not  previously  metered,  see  text  of  accounts  No.  323-324. 

751-6.    Inspecting  Customers'  Installations. 

This  account  shall  include  labor  and  expense  incurred  in  inspecting 
and  testing  plumbing  and  fixtures  of  consumers  in  connection  with 
complaints;  and  all  other  services  performed  on  the  premises  of  con- 
sumers for  which  no  charge  is  made  by  the  utility. 


OPERATING    EXPENSE   ACCOUNTS  91 

751-7.    Other  Transmission  and  Distribution  Operating  Labor. 

This  account  shall  include  the  cost  of  labor  engaged  in  inspecting 
and  patrolling  transmission  and  distribution  mains  and  ditches,  serv- 
ice pipes  and  stops,  fire  hydrants,  fountains  and  troughs;  flushing 
mains  and  hydrants,  and  taking  street  pressure ;  and  the  cost  of  other 
labor  similarly  employed.  Also  include  such  other  operating  labor  in 
the  transmission  and  distribiition  system  as  is  not  provided  for  in  any 
of  the  preceding  accounts. 

752.  Miscellaneous  Distribution  Supplies  and  Expenses. 

This  account  shall  include  the  tost  of  such  tools  as  are  not  a  proper 
charge  to  plant  and  equipment,  used  by  street  department  employees; 
office  supplies  of  such  department,  and  other  miscellaneous  distribu- 
tion operations,  supplies  and  expenses  not  elsewhere  provided  for. 

753.  Maintenance. 

753-1.    Maintenance  of  Transmission  and  Distribution  Build- 
ings and  Fixtures. 

This  account  shall  include  the  cost  of  maintaining  transmission  and 
distribution  buildings  and  fixtures. 

753-2.    Maintenance  of  Transmission  Mains. 

This  account  shall  include  the  cost  of  labor,  material  and  supplies 
consumed,  and  other  expenses  incident  to  repairing  transmission 
mains.  This  includes  such  items  as  seeking  and  repairing  leaks,  re- 
moving and  repairing  worn  sections  and  fittings,  calking,  digging  and 
repaving  in  connection  with  such  work,  repairing  manholes,  thawing 
pipes,  and  scraping  to  remove  incrustations. 

753-3.    Maintenance  of  Storage  Reservoirs,  Tanks  and  Stand- 
pipes. 

This  account  shall  include  the  cost  of  repairing  and  maintaining 
distribution  storage  reservoirs,  tanks  and  standpipes,  including  re- 
pairs to  masonry,  painting,  calking,  replacing  decayed  parts,  hoops, 
etc.  Include  also  repairs  to  appurtenant  equipment,  such  as  inlet, 
outlet,  flush,  drain,  and  overflow  pipes;  gate,  check  and  other  control 
valves ;  gauges,  floats,  high  water  alarms,  and  other  apparatus  used  in 
connection  with  distribution  reservoirs,  tanks  and  standpipes. 

753-4.    Maintenance  of  Distribution  Mains. 

This  account  shall  include  the  cost  of  labor,  material  and  supplies, 
and  other  expenses  incident  to  repairing  distribution  mains.    This  in- 


92  OPERATING   EXPENSE   ACCOUNTS 

eludes  such  items  as  seeking  and  repairing  leaks,  removing  and  re- 
placing worn  sections  and  fittings,  calking,  digging  and  repaying  in 
connection  with  such  work,  repairing  manholes,  thawing  pipes  and 
scraping  to  remove  incrustations. 

753-5.    Maintenance  of  Services. 

This  account  shall  include  the  cost  of  labor,  material  and  supplies, 
and  other  expenses  incident  to  repairing  water  services.  This  includes 
such  items  as  seeking  and  repairing  leaks,  removing  and  replacing  worn 
out  pipes  and  fittings,  including  stop  cocks,  and  service  boxes,  digging 
and  repaving  in  connection  with  such  work,  cleaning  pipes,  thawing 
pipes,  and  other  expense  of  a  similar  nature. 

753-6.    Maintenance  of  Meters. 

This  account  shall  include  the  cost  of  repairing  meters  used  to 
measure  water  sold  to  consumers.  This  will  include  readjusting, 
painting,  replacing  worn  gears,  wearing  parts,  dials,  meter  fittings, 
unions,  etc.  This  account  should  also  include  the  cost  of  labor  and 
material  to  repair  meter  boxes  or  vaults,  and  other  expense  incident 
thereto. 

Note. — ^When  meters  are  permanently  withdrawn  or  retired  from  service,  and  re- 
placed, the  original  cost  of  such  meters  withdrawn  or  retired,  shall  be  credited  to 
plant  and  equipment  account  No.  323,  "Water  Meters."  and  concurrently  a  charge 
shall  be  made  to  this  account  for  like  amount,  (less  salvage  value),  or  for  the 
portion  of  such  charge  that  has  not  been  provided  for  in  the  reserve  for  accrued 
depreciation. 

753-7.    Maintenance  of  Hydrants. 

This  account  shall  include  the  cost  of  labor  and  material,  and  other 
expense  incurred  in  repairing  hydrants.  This  includes  renewal  of 
worn  out  parts,  painting,  calking,  digging  and  repaving  in  connection 
with  repairs. 

753-8.    Maintenance  of  Fountains  and  Troughs. 

This  account  shall  include  the  cost  of  labor  and  material  and  other 
expense  incurred  in  making  repairs  to  fountains  and  troughs.  This 
includes  renewal  of  worn  out  pipe,  valves,  painting,  digging  and  re- 
paving in  connection  with  such  repairs. 

760.  Commercial  and  New  Business. 

761.  Commercial. 
761-1.    Superintendence. 

This  account  shall  include  the  salaries  (or  the  proper  portion  there- 
of) of  employees  having  supervision  over  the  commercial  department. 


OPERATING    EXPENSE   ACCOUNTS  93 

761-2.    Meter  Reading. 

This  account  shall  include  the  cost  of  labor  employed  in  meter 
reading. 

761-3.    Consumers'  Accounts. 

This  account  shall  include  the  salaries  (or  the  proper  portion  there- 
of) of  employees  engaged  in  keeping  service  accounts  with  consumers. 
Salaries  of  mercantile  ledger  bookkeepers  should  be  charged  to  "Mer- 
chandise and  Jobbing  Revenue,"  or  to  "New  Business — Salaries"  or 
as  may  be  appropriate. 

761-4.    Collecting. 

This  account  shall  include  the  cost  of  labor  incurred  in  the  collec- 
tion of  consumers*  accounts,  including  the  salaries  (or  proper  portion 
thereof)  of  employees  in  the  collection  office;  cost  of  distributing 
service  bills;  wages  of  employees  while  engaged  in  removing  meters 
for  non-payment  of  bills;  commissions  paid  for  collecting  bills. 

761-5.    Contract  Department. 

This  account  shall  include  the  salaries  (or  the  proper  portion  there- 
of) of  Employees  in  the  contract  department.  Items  assignable  to 
"New  Business — Salaries"  should  not  be  included. 

761-6.    Miscellaneous  Commercial  Department  Expenses. 

This  account  shall  include  the  cost  of  supplies  and  incidental  ex- 
penses of  the  commercial  office.  This  covers  meter  readers,-  lamps  and 
carfare  of  employees  in  commercial  department  and  other  incidental 
expenses  in  connection  with  the  commercial  department. 

770.    New  Business  Expenses. 
770-1.    New  Business — Salaries. 

This  account  shall  include  the  salaries  (or  the  proper  portion  there- 
of) of  employees  engaged  in  the  promotion  and  extension  of  the 
utility's  water  business.  This  will  include  office  clerks,  solicitors  and 
salesmen,  and  commissions  paid  solicitors  and  salesmen  for  the  intro- 
duction and  sale  of  water  appliances. 

770-2.    New  Business  Supplies  and  Expenses. 

This  account  shall  include  the  cost  of  all  supplies  consumed. and 
expenses  incurred  in  connection  with  the  new  business  department 
This  includes  office  supplies,  traveling  and  personal  expenses  of  sales- 
men and  solicitors,  advertising,  demonstrations  and  the  cost  of  piping. 


94  OPERATING  EXPENSE  ACCOUNTS 

devices  and  appliances  (including  labor  and  expense  on  installation) 
furnished  to  the  consumer  for  which  no  charge  is  made,  in  order  to 
secure  new  business.  If  a  portion  of  the  cost  of  such  installation  is 
chargeable  to  the  consumer,  the  loss  only  will  be  charged  to  this 
account. 

780.  General  and  Miscellaneous  Expenses. 

781.  Undistributed  General  Expenses. 
781-1.     General  Office  Salaries^ 
781-11.    Administrative  Salaries. 

This  account  shall  include  the  salaries  of  the  chairman  of  the  board, 
president,  vice-president,  treasurer,  secretary,  comptroller,  general 
auditor,  general  manager,  assistant  general  manager,  chief  engineer, 
general  superintendent,  purchasing  agent,  and  all  other  employees 
whose  jurisdiction  extends  to  the  entire  system  and  whose  services 
can  not  be  allocated  to  the  several  departments. 

781-12.    Other  General  Office  Salaries. 

This  account  shall  include  the  salaries  of  auditors,  bookkeepers, 
cashiers,  janitors,  porters,  messengers,  and  other  clerks  and  employees 
whose  time  is  devoted  to  the  work  of  the  general  office. 

Note. — The  cost  of  labor  of  clerks  and  other  employees  in  the  commercial  de- 
partment shall  not  be  included  in  this  account,  but  in  account  No.  761,  "Commercial" 
or  the  appropriate  subdivision  thereof. 

781-2.    Miscellaneous  General  Expenses. 
781-21.    General  Office  Supplies  and  Expenses. 

This  account  shall  include  the  cost  of  office  supplies,  stationery, 
telegrams,  telephone  service  and  the  maintenance  of  office  furniture; 
rented  rooms  in  office  buildings  and  maintenance  of  such  rented  rooms ; 
rental  of  office  equipment  such  as  statistical  machines,  and  all  other 
miscellaneous  expenses  of  general  offices. 

Expenses  of  departmental  employees  should  be  charged  to  the 
appropriate  departmental  accounts. 

781-22.    General  Stationery  and  Printing. 

This  account  shall  include  the  cost  of  stationery,  stationery  supplies, 
and  postage  not  elsewhere  provided  for. 

Note  A. — The  cost  of  printing  briefs  and  other  legal  papers  should  be  charged  to 
account  No.  781-24,  "Law  Expenses." 

Note  B. — The  cost  of  printing  signs,  posters,  and  other  advertising  matter  should 
be  charged  to  account  No.  770-2,  "New  Business  Supplies  and  Expenses." 

Note  C. — The  cost  of  such  mechanical  calculators,  typewriters,  duplicating  ma- 
chines, and  other  office  appliances  as  are  not  properly  capitalized,  should,  if  for  use 


OPERATING  EXPENSE  ACCOUNTS  95 

in  general  office  be  charged  to  account  No.  781-21,  "General  Office  Supplies  and 
Expenses,"  or  if  not  for  the  use  of  department  officers,  to  the  proper  departmental 
accounts. 

781-23.    Maintenance  of  General  Structures. 

This  account  shall  include  the  cost  of  maintaining  general  office 
buildings  or  other  structures  for  general  purposes.  This  covers  main- 
tenance of  walks,  driveways,  and  grounds  connected  therewith  and 
all  incidental  expenses  connected  with  the  maintenance  of  such  build- 
ings or  structures. 

781-24.    Law  Expenses. 

This  account  shall  include  all  law  expenses  such  as  salaries  and  ex- 
penses of  counsel,  solicitors  and  attorneys,  their  clerks  and  attendants 
and  expenses  of  their  offices;  cost  of  law  books,  printing  bqefs,  legal 
forms,  testimony,  reports,  etc.,  fees  and  retainers  for  services  of 
attorneys  not  regular  employees,  court  costs"  and  payments  of  special 
notarial  and  witness  fees  not  provided  for  elsewhere,  expenses  con- 
nected with  taking  depositions,  and  all  law  and  court  expenses  not 
provided  for  elsewhere. 

781-25.    Insurance. 

This  account  shall  include  premiums  paid  for  fire,  fidelity,  boiler, 
casualty,  burglar,  lightning  and  all  other  insurance;  also  charges  by 
which  self -insurance  is  provided. 

This  account  shall  be  credited  with  dividends  paid  or  surplus  re- 
turned to  the  accounting  company  in  any  other  form  by  mutual  in- 
surance companies.  - 

Note. — ^That  portion  of  the  premium  for  liability  insurance  based  on  the  payroll 
expended  on  construction  accounts  may  be  charged  to  the  construction  accounts 
affected. 

781-26.    Store  Expenses. 

This  account  shall  include  all  salaries  and  expenses  in  connection 
with  store  rooms.  This  covers  the  cost  of  sending  materials  and  sup- 
plies from  general  storerooms  and  the  collection  of  scrap  material. 

To  this  account  shall  be  credited  all  discounts  recovered  through 
the  prompt  payment  of  bills  for  material  and  supplies  consumed  in 
operation  unless  such  discounts  are  applied  to  the  particular  bills. 

Note. — Expenses  charged  to  this  account  may  be  distributed  over  materials 
passed  through  the  store  department  on  the  basis  of  a  percentage  of  invoice  cost  of 
such  materials  or  other  basis  deemed  appropriate  by  the  management  of  the  account- 
ing company.  Amounts  so  distributed  should  be  credited  to  this  account  and  charged 
to  the  accounts  to  which  the  cost  of  such  material  is  charged  as  they  are  issued  or 
used.  Credits  should  be  made  in  such  details  as  to  permit  the  accounting  company 
to  analyze  them. 


96  OPERATING  EXPEi^SE  ACCOUNTS 

781-27.    Transportation  Expenses. 

This  account  shall  include  the  cost  of  feed,  keep  and  shoeing  of 
horses,  wages  of  stablemen,  hostlers,  veterinary  expenses  and  all  other 
expenses  of  stabling  horses;  also  wages  of  garage  men,  cost  of  gasoline, 
lubricants  and  other  garage  supplies,  and  the  cost  of  repairing  harness 
and  vehicles. 

Note  A. — ^The  cost  of  horses  piirchased  to  replace  others  should  be  charged  to 
account  No.  327,  "General  Equipment." 

Note  B. — Charges  to  this  account  may  be  distributed  to  the  work  done  by  the 
stable  and  garage  equipment  on  the  basis  of  hourly  rates,  rates  per  ton  per  mile 
hauled,  or  other  basis  deemed  appropriate  by  the  management  of  the  accounting 
company.  Amoimts  so  distributed  should  be  credited  to  this  account  and  charged 
to  the  accoimt  representing  the  construction  or  operation  benefited.  Credits  should 
be  made  in  such  detail  as  to  permit  the  accounting  company  to  analyze  them. 

781-28.    Othei:  Miscellaneous  General  Expenses. 

This  account  shall  include  the  cost  of  publishing  and  distributing 
annual  reports  to  stockholders,  advertising  notices  of  stockholders' 
meetings,  dividend  notices  and  other  corporate  and  financial  notices 
of  a  general  character,  association  dues,  contributions  for  conventions 
and  meetings  of  the  industry,  cost  of  experimental  work  conducted  for 
the  benefit  of  the  industry  or  the  improvement  of  service,  traveling 
and  incidental  expenses  of  general  officers  and  other  general  office 
employees,  fees  of  transfer  agents,  registrars  of  stocks,  and  fiscal 
agents,  directors'  fees,  compensation  to  management  corporations,  and 
other  miscellaneous  expenses  connected  with  the  general  management 
not  otherwise  provided  for. 

781-29.    Undistributed  Adjustments. 

At  least-jDnce  a  year  an  inventory  of  material  and  supplies  should 
be  taken  and  the  difference  in  respect  of  any  particular  class  of  ma- 
terial and  supplies  between  the  ledger  and  inventory  balances  should 
be  debited  or  credited  to  this  account  in  case  it  can  not  be  assigned  to 
a  specific  account. 

This  account  shall  also  be  charged  or  credited  with  miscellaneous 
minor  operating  items  of  such  a  nature  that  an  exact  distribution 
among  the  accounts  to  which  they  are  applicable  can  not  be  deter- 
mined.   This  covers  such  transactions  as  receipts  from  sale  of  junk. 

Note. — ^Where  materials  and  suppHes  have  been  used  in  construction  as  well  as 
in  operation  a  suitable  proportion  of  the  shortages  or  overages  disclosed  by  the  in- 
ventory may  be  debited  or  credited  to  account  No.  350,  "Miscellaneous  Construc- 
tion Expenditures." 

782.     Retirement  Expense. 

This  account  shall  include  such  amounts  as  the  accounting  company 


OPEfeATiNG  Expense  accounts  9^ 

may  determine  to  be  necessary  (or  as  it  may  be  required  by  law  or 
by  the  order  of  the  regulatory  commission  to  charge)  to  provide  a  re- 
serve against  which  may  be  charged  the  original  cost  of  all  property 
retired  from  service,  plus  the  cost  of  dismantling,  less  salvage.  The 
amounts  charged  to  this  account  and  credited  to  "Retirement  Reserve" 
shall  be  in  addition  to  the  necessary  cost  of  keeping  the  plant  and 
equipment  in  a  high  state  of  efficiency  through  charges  to  the  regular 
maintenance  accounts. 

Note. — It  is  the  intent  of  the  classification  that  a  reserve  shall  be  provided  suffi- 
cient to  cover  all  retirement  losses  that  may  reasonably  be  expected.  If  the  account- 
ing company  does  not  do  this  and  later  finds  that  retirement  losses  are  incurred  in 
excess  of  the  amount  that  has  been  provided  the  charging  of  such  losses  to  operating 
expenses  either  directly  or  through  the  suspense  accoimt  "Property  Abandoned" 
does  not  bind  the  regulatory  commission  to  the  acceptance  of  such  charges  as  part 
of  the  necessary  current  cost  of  maintenance. 

783.    Injuries  and  Damages. 

783-1.    Claim  Department  Expenses. 

This  account  shall  include  salaries  and  expenses  of  claim  agents, 
investigators,  adjusters,  and  others  engaged  in  the  investigation  of 
accidents  and  adjustment  of  claims. 

783-2.    Medical  Expenses. 

This  account  shall  include  salaries,  fees,  and  expenses  of  surgeons 
and  doctors,  nursing,  hospital  attendants,  medical  and  surgical  sup- 
plies ;  fees  and  expenses  of  coroners  and  undertakers ;  and  contributions 
to  hospitals. 

783-3.    Injuries  to  Employees. 

This  account  shall  include  the  amounts  paid  in  settlement  of  claims 
of  employees  for  injuries  arising  in  their  employment;  also  injuries 
paid  to  disabled  employees  while  off  duty. 

783-4.    Other  Personal  Injuries  and  Property  Damage. 

This  account  shall  include  amounts  paid  in  settlement  of  claims  of 
persons  other  than  employees  for  personal  injuries  sustained  in  con- 
nection with  the  operation  of  the  plant  and  amounts  paid  in  settlement 
of  claims  for  damage  to  property  not  owned  by  the  accounting  company. 

783-5.    Miscellaneous  Accident  Expenses. 

This  account  shall  include  all  expenses  in  connection  with  accidents 
and  damages  not  provided  for  in  the  foregoing  accounts. 

Note. — If  it  so  desires,  the  accounting  company  may  charge  each  month  to  "In- 
juries and  Damages"  (or  to  the  appropriate  sub-account)  and  credit  to  account  No* 
262,  "Casualty  and  Insurance  Reserve"  a  proportion  of  the  total  amount  estimated 


98  ■     OPERATING   EXPENSE  ACCOUNTS 

to  be  necessary  to  expend  during  the  year  for  injury  and  damage  claims,  and  the 
actual  disbiirsements  above  designated  shall  then  be  charged  against  said  reserve 
accounts.  The  charges  to  this  accoimt  shall  be  adjusted  at  the  close  of  the  fiscal  year  to 
actual  expenses  \xn  less  a  balance  remains  representing  liability  for  unsettled  claims. 

784.  Regulatory  Commission  Expenses. 

This  account  shall  include  expenses  incurred  by  the  accounting  com- 
pany in  its  transactions  with  governmental  regulative  commissions. 
This  covers  fees  and  retainers  and  expenses  of  counsel,  solicitors, 
attorneys,  clerks  and  attendants,  witnesses,  and  others  whose  services 
are  secured  especially  for  the  defense  or  prosecution  of  those  petitions 
presented  to  a  regulatory  commission  that  affect  the  accounting  com- 
pany; the  pa3^  traveling,  and  other  expenses  of  those  specially  em- 
ployed or  assigned  to  ascertain  the  value  of  property  owned  or  used 
by  the  accounting  company;  the  cost  of  stationery  and  printing  and 
engineering  supplies  consumed,  and  other  necessary  expenses  of  a 
similar  character. 

This  account  does  not  include  expenses  for  improvement  of  service, 
for  additional  inspection,  etc.,  which  are  made  necessary  by  the  rules, 
regulations  or  orders  of  a  regulatory  commission.  Such  expense 
should  be  charged  to  the  appropriate  specific  operating  expense  account. 

Note. — Expenses  incident  to  the  sale  or  issue  of  securities  should  not  be  charged 
to  this  account  but  to  the  appropriate  discoimt  account.  See  "Balance  Sheet  Ac- 
counts— General  Instructions  and  Definitions,"  Section  12,  page  7. 

785.  Relief  and  Welfare  Work. 

785-1.    Employees'  Welfare  Department. 

This  account  shall  include  all  salaries  and  expenses  incurred  in  con- 
ducting accident  prevention,  relief,  and  welfare  departments;  alsox^on- 
tributions  to  such  departments. 

785-2.    Pensions. 

This  account  shall  include  all  pensions  paid  to  retired  employees 
and  all  expenses  in  connection  therewith. 

786.  Franchise  Requirements. 

This  account  shall  include  the  value  at  the  normal  selling  price  of 
all  water  and  material  and  supplies  furnished  municipal  corporations 
in  compliance  with  franchise  requirements  and  for  which  no  payment 
is  received  by  the  accounting  company;  also  all  direct  expenses  in- 
curred in  the  compliance  with  such  requirements  for  which  no  reim- 
bursement is  received  by  the  accounting  company. 

Amounts  charged  to  this  account  for  which  there  is  no  direct  money 
outlay  shall  be  credited  to  account  No.  790,  "Duplicate  Miscellaneous 
Charges— Cr." 


OPERATING    EXPENSE  ACCOUNTS  99 

787.  Amortization  of  Franchises. 

This  account  shall  include  for  each  accounting  period  the  amount 
charged  to  distribute  the  cost  of  limited  franchises*  equitably  over  the 
life  of  the  franchise.  Amounts  charged  to  this  account  shall  be  con- 
currently credited  to  fixed  capital  account  No.  302,  "Franchises." 

788.  Water  Expenses  Transferred — Cr. 

This  account  shall  include  such  part  of  the  operating  cost  (other 
than  production  expenses,  for  which  see  Production  Account  No. 
749,  "Production  Expenses  Transferred — Cr.")  borne  in  the  first  in- 
stance by  the  accounting  company's  water  department  as  are  properly 
chargeable  to  another  co-ordinate  department  such  as  an  electric  or 
gas  department. 

This  is  not  intended  to  prohibit  the  apportioning  of  primary  ac- 
counts between  departments,  and  so  far  as  practicable  departmental 
cost  should  be  determined  in  that  way.  There  may,  however,  be 
cases  where  it  is  desirable  to  assign  to  other  operations  a  flat  per- 
centage of  total  water  operating  expenses  or  of  some  group  of  water 
operating  expenses  or  some  similar  arbitrary  amount,  and  when  this 
is  so,  the  credit  should  be  made  to  this  account. 

789.  Joint  Operating  Expense — Cr. 

When  any  plant  or  equipment  is  maintained  or  operated  by  the 
accounting  company  for  the  joint  benefit  of  itself  and  others  under 
an  arrangement  for  apportioning  the  operating  expenses,  the  portion 
of  such  expenses  chargeable  to  others  under  the  arrangement  may  be 
credited  to  this  account  if  it  is  based  on  a  percentage  of  the  total 
operating  expenses  or  a  percentage  of  the  total  of  some  group  of 
primary  operating  expense  accounts  or  determined  in  some  similar 
fashion.  So  far  as  practicable  joint  operating  cost  should  be  appor- 
tioned by  primary  accounts  and  that  part  of  such  cost  borne  in  the 
first  instance  by  the  accounting  company  but  chargeable  to  the  other 
party  or  parties  to  the  joint  agreement,  should  be  credited  to  the 
primary  accounts  involved. 

790.  Duplicate  Miscellaneous  Charges— Cr. 

This  account  shall  include  the  concurrent  credits  for  all  charges 
which  may  be  made  to  any  operating  expense  account,  except  as  pro- 
vided for  in  account  No.  748,  "Duplicate  Production  Charges— Cr.," 
in  respect  of  the  consumption  of  gas  produced  or  purchased  primarily 
for  resale  by  the  accounting  company;  also  all  similar  charges  in  re- 
spect of  any  services  rendered  for  which  there  is  no  direct  money  out- 


100  OPERATING   EXPENSE  ACCOUNTS 

lay.  This  covers  such  items  as  water  supplied  to  a  municipality 
without  charge  in  accordance  with  franchise  requirement;  water  fur- 
nished to  employees  in  lieu  of  wages;  housing  for  employees  as  part 
compensation  for  their  services,  etc. 

This  account  is  optional  to  the  extent  that  charges  of  the  sort  de- 
scribed, not  involving  arfy  direct  money  outlay,  are  not  required  to 
be  made.  If  the  accounting  company  desires  to  make  such  charges, 
however,  the  concurrent  credit  must  be  to  this  account. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY, 

BERKELEY 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 

STAMPED  BELOW 

Books  not  returned  on  time  are  subject  to  a  fine  of 
50c  per  volume  after  the  third  day  overdue,  increasing 
to  $1.00  per  volume  after  the  sixth  day.  Books  not  in 
demand  may  be  renewed  if  application  is  made  before 
expiration  of  loan  period^ 


NOV  ]0 1925 


25»n-7.'2.5 


w 


:iir: 


»^  ^j  ?^  I  »i  • 


/V 


TT/ 


.,.  .  a  A 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


